appendix 4d: half year report for the period ended 31 ... · 2/1/2018 · fmg jv exploration...

Appendix 4D: Half Year Report for the

Period Ended 31 December 2017

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Current Reporting Period: Half-year ended 31 December 2017

Previous Corresponding Reporting Period: Half-year ended 31 December 2016

CONSOLIDATED

$’000

Revenues from ordinary activities* Up 14.0% to 435,349

Profit from ordinary activities after tax attributable to members* Down 7.0% to 79,090

Net profit for the period attributable to members* Down 7.0% to 79,090

* From continuing operations

DISTRIBUTIONS

Dividends Amount per security Franked amount per security

Interim dividend (per share) 4.5 cents 4.5 cents

Record date of interim dividend 28 March 2018

Payment date of interim dividend 13 April 2018

Franking 100% franked

The financial effect of the current reporting period interim dividend has not been brought to account in the financial

statements for the period ended 31 December 2017 and will be recognised in subsequent financial reports.

31 December

2017

$

31 December

2016

$

Net tangible asset per security 1.12 0.86

EXPLANATION OF RESULTS

Requirement Title Reference

Review of results Operating and Financial Overview Page 2

A statement of comprehensive income Condensed Consolidated Statement of Profit or Loss & Other

Comprehensive Income

Page 9

A statement of financial position Condensed Consolidated Statement of Financial Position 0

A statement of retained earnings Condensed Consolidated Statement of Changes In Equity Page 11

A statement of cash flows Condensed Consolidated Statement of Cash Flows Page 12

Earnings per share Condensed Consolidated Statement of Profit or Loss & Other

Comprehensive Income

Page 9

CHANGES IN CONTROLLED ENTITIES

On 28 November 2017, Northern Star Resources Limited acquired 100% of the fully paid ordinary shares in Tanami Exploration

NL from Tanami Gold NL. Refer to note 16 of the financial statements for further details.

The Group did not gain or lose control over any other entities during the period.

ASSOCIATE AND JOINT VENTURE ENTITIES

Associate Principal Activities 31 December

2017

31 December

2016

Superior Gold Inc. Production & Development 19.18% -

Associates are all entities over which the Group has significant influence but not control or joint control. Investments in

associates are accounted for using the equity method of accounting after initially being recognised at cost.

Appendix 4D: Half Year Report for the

Period Ended 31 December 2017

Joint Ventures Principal Activities 31 December

2017

31 December

2016

FMG JV Exploration 65.41% 65.08%

Mt Clement JV Exploration 20.00% 20.00%

East Kundana Production JV Production & Development 51.00% 51.00%

Kanowna West JV Exploration 87.07% 79.19%

Kalbara JV Exploration 63.03% 62.77%

West Kundana JV Exploration 75.50% 75.50%

Zebina JV Exploration 80.00% 80.00%

Acra JV Exploration 20.00% 20.00%

Roberston JV Exploration 40.00% 40.00%

Cheroona JV Exploration 49.00% 49.00%

The joint arrangements listed above are classified as joint operations and are not separate legal entities. They are

contractual arrangements between participants for the sharing of costs and outputs and do not themselves generate

revenue and profit. The joint operations are of the type where initially one party contributes tenements with the other party

earning a specified percentage by funding exploration activities; thereafter the parties often share exploration and

development costs and output in proportion to their ownership of joint venture assets. The joint operations are accounted for

in accordance with the Group's accounting policy set out in the notes to the consolidated annual financial report as at

30 June 2017.

AUDIT This report is based on financial statements which have been subject to a review by Deloitte .

NORTHERN STAR RESOURCES LIMITED

ABN: 43 092 832 892

Half Year Report

for the period ended 31 December 2017

ASX Code: NST

Dated 19 February 2018

31 DECEMBER 2017 HALF YEAR REPORT

Page 1

Corporate Directory

TABLE OF CONTENTS PAGE

Corporate Directory 1

Review of Operations and Activities 2

Directors' Report 5

Auditor’s Independence Declaration 7

Interim Financial Statements 8

Independent Auditor’s Review Report 24

This interim financial report does not include all the notes of the type normally included in an annual financial report.

Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2017 and any public

announcements made by Northern Star Resources Limited during the interim reporting period in accordance with the

continuous disclosure requirements of the Corporations Act 2001.

CORPORATE DIRECTORY

DIRECTORS

Bill Beament (Executive Chairman)

John Fitzgerald (Lead Independent Director)

Christopher Rowe (Non-Executive Director)

Peter O’Connor (Non-Executive Director)

Shirley Int’Veld (Non-Executive Director)

David Flanagan (Non-Executive Director)

COMPANY SECRETARY

Liza Carpene

REGISTERED OFFICE/

PRINCIPAL PLACE OF BUSINESS

Level 1

388 Hay Street

Subiaco, WA, 6008

Australia

Telephone: +61 8 6188 2100

Facsimile: +61 8 6188 2111

Website: www.nsrltd.com

Email: [email protected]

SHARE REGISTRY

Link Market Services

Level 12

QV1 Building, 250 St Georges Terrace

Perth WA 6000, Australia

Telephone: +61 1300 554 474

Website: www.linkmarketservices.com.au

HOME STOCK EXCHANGE

ASX Limited

2 The Esplanade

Perth WA 6000

Australia

ASX Code: NST

AUDITORS

Deloitte Touche Tohmastu

Brookfield Place, Tower 2

123 St Georges Terrace

Perth WA 6000

Australia

+61 8 9635 7000

http://www.nsrltd.com/

mailto:[email protected]


Page 2

Review of Operations

OVERVIEW

Northern Star Resources Limited (Northern Star) is an ASX

100 gold (Au) production and exploration company with

a Mineral Resource base of 10.2 million ounces and Ore

Reserves of 3.5 million ounces (1), located in highly

prospective regions of Western Australia and the

Northern Territory.

As the third largest listed Australian gold producer,

Northern Star continues to deliver on its strategic

objective of being a significant gold company delivering

outstanding value to its Shareholders, and is on track to

deliver on its stated guidance of between 525,000 to

575,000 ounces in this financial year at an all-in sustaining

cost of $1,000-$1,050. Production is being delivered

from two concentrated operating centres, being

Jundee and Kalgoorlie (encompassing Kundana,

Kanowna Belle and Millennium).

The Company continues to advance activities at the

Central Tanami Project in the Northern Territory and at the newly acquired Western Tanami Project in Western

Australia.

In parallel, the Company has continued to advance its exploration activities to further extend mine lives and

continues to develop an exciting organic pipeline of future projects for the business. In FY2018, the Company will

invest A$44 million in exploration and A$87 million in expansionary capital to generate the mines of the future, grow

production to 600,000ozpa in CY2018 and follow up the significant successes achieved in FY2017.

(1) As at 30 June 2017 – see ASX Release dated 3 August 2017.

OUR PEOPLE, HEALTH AND SAFETY, ENVIRONMENT AND COMMUNITY

Over the first half of the financial year, the Company continued to focus on its organic growth strategy led by our

dedicated and skilled workforce.

Northern Star remains focused of ensuring the health and safety of the workforce, and continues to demand a strong

safety performance in every aspect of the business as safety is the first key core value of the organisation and is

fundamental to our success. Whilst it has been pleasing to see such a significant reduction in our lagging safety

indicators, the Company has continued to focus and drive a stronger safety culture concentrating on addressing

leading indicators.

As at 31 December 2017, Northern Star’s 12 month moving average Lost Time Injury frequency rate (LTIFR) was 0.7

(Industry 2.7), a reduction of 81% on the corresponding period, and its Total Recordable Injury frequency rate (TRIFR)

was 5.4, a reduction of 75% on the corresponding period. Northern Star believes that any injury is unacceptable, and

its workforce remains focussed on proactively reducing these lagging indicators.

In November 2017, Northern Star released its inaugural Sustainability Report which covers the FY2017 period and is

designed on our STARR Core Values framework. The Report demonstrates the Company’s commitment to operating

our business responsibly, and reflects our sustainability vision of delivering responsible environmental and social

business practices that lead to both the creation of strong economic returns for our Shareholders and shared value

for our Stakeholders.

The Company’s Sustainability Report is available on the Company’s website.

https://www.nsrltd.com/wp-content/uploads/2017/11/Sustainability-Report-FY2017-Final.pdf


Page 3


MINE OPERATIONS REVIEW

All ore has been sourced from the Jundee, Kalgoorlie operations and Paulsens gold mines. During the period, a total

of 267,278* ounces of gold was sold at an average of $1,678 per ounce, with an all-in sustaining cost for the period of

$1,043 per ounce.

Measure Jundee

Kalgoorlie

Operations* Paulsens Total

Total Material Mined tonnes 814,830 913,695 174,974 1,903,499

Total Material Milled tonnes 848,239 846,168 233,292 1,927,699

Gold Grade grams/tonne 5.5 4.3 3.8 4.8

Gold Recovery % 90% 93% 78% 90%

Gold Produced ounces 135,386 109,435 22,436 267,258

Gold Sold ounces 137,095 106,972 23,211 267,278

Revenue A$’000 230,396 165,913 39,040 435,349

Cost of Sales A$’000 121,297 110,346 69,806 301,449

Depreciation &

amortisation A$’000

24,272 24,912 40,837 90,021

Mine Operations EBITDA A$’000 133,371 80,479 9,785 223,635

All-in Sustaining Cost A$/ounce sold 863 1,191 1,485 1,043

* Includes Millennium Operations

FINANCIAL OVERVIEW

Half Year End

31 Dec 2017

Half Year End

31 Dec 2016[a]

$’000

Change

%

Change

Revenue 435,349 415,485 19,864 5%

EBITDA(1) 201,738 218,803 (17,065) (8%)

Net profit 79,090 104,624 (25,534) (24%)

Net profit from continuing operations 79,090 84,720 (5,630) (7%)

Cash flow from operating activities 126,787 111,349 15,438 14%

Cash flow used in investing activities (126,067) (98,586) (27,481) 28%

Sustaining capital (41,139) (54,107) 12,968 (24%)

Non sustaining capital (33,982) (30,325) (3,657) 12%

Exploration (21,804) (30,968) 9,164 (30%)

Acquisition of available-for-sale

financial assets (26,007) (750) (25,257) 3,368%

Acquisition of Western Tanami Project (4,000) - (4,000) (100%)

Other investing 865 17,564 (16,699) (95%)

Free cash flow(2) 720 12,763 (12,043) (94%)

Underlying free cash flow(3) 61,098 56,051 5,047 9%

Average gold price per ounce (A$) 1,678 1,683 (5) 0%

Gold mined (ounces) 293,990 271,536 22,454 8%

Gold sold (ounces) 267,278 246,229 21,049 9%

All-in sustaining costs (AISC) per ounce sold (A$) 1,043 1,111 (68) (6%)

Cash and cash equivalents 368,054 282,101 85,953 30%

Earnings per share (cents) 13.1 17.4 (4.3) (25%)

[a] Unless stated otherwise, includes continuing and discontinuing operations for the period ended 31 December 2016.

(1) EBITDA is earnings before interest depreciation, amortisation and impairment and is calculated as follows: Profit before Income tax plus depreciation, amortisation, impairment and finance costs

less interest income.

(2) Free Cash Flow is calculated as operating cash flow minus investing cash flow.

(3) Underlying Free Cash Flow is calculated as follows: 31 Dec 2017 - free cash flow ($0.7 million) plus investments ($26.0 million), plus M&A ($4.0 million), plus FY17 tax ($35.2 million), plus working capital

adjustment ($7.7 million), less bullion awaiting settlement ($12.5 million). 31 Dec 2016 - free cash flow ($12.8 million) plus bullion awaiting settlement ($10.6 million), plus stamp duty paid on prior

acquisitions ($1.7 million), plus investments ($0.8 million), plus FY16 tax ($33.6 million), less working capital adjustment ($3.4 million).

EBITDA, Underlying Free Cash Flow and All-in Sustaining Costs (AISC) are unaudited non IFRS measures


Page 4


Profit

The Group recorded a 7% reduction in profit from continuing operations for the six months to 31 December 2017

compared to the prior half year ended 31 December 2016. Increased gold sales (H1 2018: 267,278; H1 2017: 246,229)

was offset by a $5/oz lower average realised gold price and increased cost of sales associated with the higher gold

production and sales. This increase was primarily due to depreciation charges associated with Paulsens.

Balance Sheet

Total assets have increased to $956 million ($925 million: June 2017) primarily due to increases in mine properties at

Jundee and Kalgoorlie with the construction of the underground Millennium mine. Exploration and evaluation assets

have increased by $11 million from the acquisition of Western Tanami and continued focus on regional and in-mine

exploration programs across all operations. Available-for-sale financial assets have increased during the half year

ended 31 December 2017 due to the purchase of 17.2% of Echo Resources Limited.

Dividends of $36 million were paid during the half year reducing cash and cash equivalents. Total liabilities reduced

to $280 million ($310 million: June 2017) as the Company paid a $35 million balancing payment for FY2017 corporate

tax. This was offset by the assumed rehabilitation liability of $10 million from the acquisition of Western Tanami.

Cash Flow

Operating cash flow for the period ended 31 December 2017 increased to $127 million ($111 million:

31 December 2016) due to higher gold sales which offset both the additional operating costs associated with the

increase in gold production and the increase in corporate taxes paid during the period. After adjusting for

acquisition and divestment activity, associated with the $4 million purchase of Western Tanami and acquisition of $24

million of shares in Echo Resources Limited during the period ended 31 December 2017 and proceeds from the

disposal of Plutonic operations arising in the prior period ($17 million), cash outflows from investing activities reduced

by $18 million. Cash flows from financing activities reduced by $10 million from the prior period where a special

dividend of 3 cents per share was paid following the completion of the sale of the Plutonic operations.

Exploration

Consolidation of the Group Mineral Resource and Ore Reserve inventory across the operations is the strong focus for

the Company building on the significant mine life growth achieved in the prior year. During the current period, the

Company has continued to record new discoveries and strong results from major in-mine drill programs at the

Jundee and Kalgoorlie operations as well as excellent drilling results from regional exploration programs in the

Jundee and Carbine districts. Tenure holdings have been significantly increased with transactions in the Kanowna,

Jundee and Tanami districts in Western Australia and the Northern Territory.


Page 5

Directors’ Report

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of

Northern Star Resources Limited and the entities it controlled at the end of, or during, the half-year ended

31 December 2017.

DIRECTORS

The following persons held office as Directors of Northern Star Resources Limited during the financial period and up to

the date of this report:

William J (Bill) Beament

John D Fitzgerald

Christopher K G Rowe

Peter E O’Connor

Shirley In’tVeld

David Flanagan

PRINCIPAL ACTIVITIES

The Group’s principal continuing activity during the period consisted of:

▪ mining of gold deposits at Paulsens, Kanowna Belle, East Kundana Joint Venture, Millennium and Jundee

operations;

▪ construction and development of extensions to existing gold mining operations at all locations;

▪ exploration at Central Tanami Project in the Northern Territory and West Tanami Project in Western Australia; and

▪ exploration and development of gold deposits within Western Australia.

DIVIDENDS

Dividends paid to members during the financial period were as follows:

2017

$’000

2016

$’000

Final dividend for the year ended 30 June 2017 of 6 cents (2016: 4 cents) per fully

paid share paid on 13 September 2017 (2016: 13 October 2016) 36,190 24,022

Special dividend (2016: 3 cents per fully paid share paid on 2 November 2016) - 18,016

36,190 42,038

In addition to the above dividends, since the end of the financial period the Directors have recommended the

payment of an interim ordinary dividend of $27.1 million (4.5 cents per fully paid share) to be paid on 13 April 2018

out of retained earnings at 31 December 2017.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs of the Group during the financial period were as follows:

▪ the acquisition of the Western Tanami Project through the purchase of 100% of the fully paid ordinary shares in

Tanami Exploration NL from Tanami Gold NL. For details of the acquisition refer to note 16 to the financial

statements.

There were no other significant changes in the state of affairs of the Group that occurred during the period under

review.

MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR

Subsequent to the period ended 31 December 2017 the Company announced:

▪ an interim fully franked dividend of 4.5 cents per share to Shareholders on the record date of 28 March 2018,

payable on 13 April 2018.

No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may

significantly affect, the Group's operations, results or state of affairs, or may do so in future years.


Page 6

Directors’ Report

ENVIRONMENTAL REGULATION

The Group holds licences and abides by Acts and Regulations issued by the relevant mining and environmental

protection authorities. The Group has a policy of at least complying with, but in most cases exceeding, its statutory

environmental performance obligations. These licences, Acts and Regulations specify limits and regulate the

management of various environmental management issues, including discharges to the air, surface water and

groundwater associated with the Group’s mining operations as well as the storage and use of hazardous materials.

All environmental performance obligations are monitored by the Board and subjected from time to time to

Government agency audits and site inspections. No significant environmental breaches have occurred or have

been notified by any Government agencies during the period ended 31 December 2017.

AUDITOR INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set

out on page 7.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to 'rounding off' of amounts in

the financial statements. Amounts in the financial statements have been rounded off in accordance with the

instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

This report is made in accordance with a resolution of Directors.

BILL BEAMENT

Executive Chairman

Perth, Western Australia

19 February 2018


Page 7

Auditor’s Independence Declaration


Page 8

Interim Financial Statements


Interim Financial Statements 9

Notes to the Consolidated Interim Financial Statements 13

Directors' Declaration 23

Independent Auditor’s Review Report 24


Page 9

Condensed Consolidated Statement of Profit or Loss

and Other Comprehensive Income

For the Six Months Ended 31 December 2017

31 Dec 2017 31 Dec 2016

Notes $'000 $'000

Continuing operations

Sales revenue 4 435,349 381,673

Cost of sales 6(a) (301,449) (247,477)

133,900 134,196

Other income and expense 5 5,317 3,300

Corporate and technical services 6(b) (24,577) (14,415)

Impairment of assets 6(c) (1,883) (1,369)

Finance costs 6(d) (1,394) (1,341)

Profit before income tax 111,363 120,371

Income tax expense (32,273) (35,651)

Profit from continuing operations 79,090 84,720

Discontinued operations

Profit from discontinued operation - 19,904

Profit for the period 79,090 104,624

Other comprehensive income

Items that may be reclassified to profit or loss

Changes in fair value of available-for-sale financial assets 7,941 (1,159)

Share of other comprehensive income of associates and joint ventures

accounted for using the equity method (207) -

Income tax relating to these items (2,382) 347

Other comprehensive income for the period, net of tax 5,352 (812)

Total comprehensive income for the period 84,442 103,812

Total comprehensive income for the period attributed to:

Owners of the Company 84,442 103,812

Total comprehensive income for the period attributable to owners of

Northern Star Resources Limited arises from:

Continuing operations 84,442 83,908

Discontinued operations - 19,904

84,442 103,812

Cents Cents

Earnings per share for profit from continuing operations attributable to

the ordinary equity holders of the Company:

Basic earnings per share 13.1 14.1

Diluted earnings per share 12.9 13.8

Earnings per share for profit attributable to the ordinary equity holders of

the Company:

Basic earnings per share 13.1 17.4

Diluted earnings per share 12.9 17.1

The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the

accompanying notes.


Page 10

Condensed Consolidated Statement of Financial Position

As at 31 December 2017

31 Dec 2017 30 June 2017

Notes $'000 $'000

ASSETS

Current assets

Cash and cash equivalents 368,054 403,060

Trade and other receivables 7 16,828 24,254

Inventories 8 69,026 58,851

Total current assets 453,908 486,165

Non-current assets

Trade and other receivables 7 3,383 3,508

Derivative financial instruments 5,133 4,921

Available-for-sale financial assets 45,567 11,619

Investments accounted for using the equity method 17,985 18,779

Property, plant and equipment 100,482 104,851

Exploration and evaluation assets 9 148,085 137,638

Mine properties 10 181,215 157,477

Total non-current assets 501,850 438,793

TOTAL ASSETS 955,758 924,958

LIABILITIES

Current liabilities

Trade and other payables 89,273 105,465

Borrowings 11 5,885 5,541

Current tax liabilities 5,289 40,811

Provisions 12 27,824 23,141

Total current liabilities 128,271 174,958

Non-current liabilities

Borrowings 11 6,474 5,677

Provisions 12 90,646 79,877

Deferred tax liabilities 54,791 49,346

Total non-current liabilities 151,911 134,900

TOTAL LIABILITIES 280,182 309,858

NET ASSETS 675,576 615,100

EQUITY

Share capital 13 229,749 217,811

Reserves 18,949 13,311

Retained earnings 426,878 383,978

Total equity 675,576 615,100

The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.


Page 11

Condensed Consolidated Statement of Changes in Equity

Notes

Share

capital

$'000

Available

for sale

reserve

$'000

Share

based

payments

reserve

$'000

Other

reserves

$'000

Retained

earnings

$'000

Total

equity

$’000

Balance at 1 July 2016 214,950 3,952 4,294 - 228,718 451,914

Profit for the period - - - - 104,624 104,624

Other comprehensive income - (812) - - - (812)

Total comprehensive income

for the period - (812) - - 104,624 103,812

Transactions with owners in their

capacity as owners:

Dividends provided for or paid 14 - - - - (42,038) (42,038)

Employee share and option

plans - value of employee

services - - 1,241 - - 1,241

Exercise of employee share

awards 1,516 - (1,516) - - -

Share plan loan repayment - - 1,516 - - 1,516

1,516 - 1,241 - (42,038) (39,281)

Balance at 31 December 2016 216,467 3,140 5,535 - 291,304 516,446

Balance at 1 July 2017 217,811 5,487 7,779 45 383,978 615,100

Profit for the period - - - - 79,090 79,090

Other comprehensive income - 5,559 - (207) - 5,352

Total comprehensive income

for the period - 5,559 - (207) 79,090 84,442

Transactions with owners in their

capacity as owners:

Dividends provided for or paid 14 - - - - (36,190) (36,190)

Employee share and option

plans - value of employee

services 5,849 - 2,429 - - 8,278

Exercise of employee share

awards 6,089 - (5,987) - - 102

Share plan loan repayment - - 3,844 - - 3,844

11,938 - 286 - (36,190) (23,966)

Balance at 31 December 2017 229,749 11,046 8,065 (162) 426,878 675,576

The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.


Page 12

Condensed Consolidated Statement of Cash Flows

For the period ended 31 December 2017

31 Dec 2017 31 Dec 2016

Notes $'000 $'000

Cash flows from operating activities

Receipts from customers (inclusive of GST) 450,937 408,235

Payments to suppliers and employees (inclusive of GST) (263,011) (254,515)

Interest received 3,829 3,298

Interest paid (236) (170)

Income taxes paid (64,732) (45,499)

Net cash inflow from operating activities 126,787 111,349

Cash flows from investing activities

Payments for acquisition of Western Tanami Project, net of cash acquired 16 (4,000) -

Payments for property, plant and equipment (21,658) (21,706)

Payments for exploration and evaluation 9 (21,804) (30,968)

Payments for mine properties (53,462) (62,726)

Payments for available-for-sale financial assets (26,007) (750)

Proceeds from disposal of business 460 17,391

Proceeds from sale of property, plant and equipment 404 173

Net cash outflow from investing activities (126,067) (98,586)

Cash flows from financing activities

Proceeds from issues of shares and other equity securities 13 3,964 1,516

Finance lease payments (3,500) (5,481)

Dividends paid to Company's shareholders 14 (36,190) (42,038)

Net cash outflow from financing activities (35,726) (46,003)

Net (decrease) in cash and cash equivalents (35,006) (33,240)

Cash and cash equivalents at beginning of the financial period 403,060 315,341

Cash and cash equivalents at end of the period 368,054 282,101

The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.


Page 13

Notes to Condensed Financial Statements


1 Corporate Information 14

2 Basis of Preparation of Half-Year Report 14

3 Segment Information 14

4 Revenue 17

5 Other Income and Expense 17

6 Expenses 17

7 Trade and Other Receivables 18

8 Inventories 18

9 Exploration and Evaluation Assets 19

10 Mine Properties 19

11 Borrowings 20

12 Provisions 20

13 Contributed Equity 20

14 Dividends 21

15 Commitments 21

16 Asset Acquisition 21

17 Fair Value of Financial Instruments 22

18 Events Occurring After the Reporting Period 22


Page 14


1. CORPORATE INFORMATION

The financial report of Northern Star Resources Limited (referred to as 'Northern Star or the 'Company') for the half-year

ended 31 December 2017 was authorised for issue in accordance with a resolution of the Directors on 19 February 2018.

Northern Star is a for-profit Company limited by shares, incorporated and domiciled in Australia where shares are publicly

traded. Details of the Group’s principal activities are included in note 3.

2. BASIS OF PREPARATION OF HALF-YEAR REPORT

These condensed consolidated interim financial statements for the half-year reporting period ended 31 December 2017

have been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations

Act 2001. Compliance with AASB 134 ensures compliance with International Financing Reporting Standard IAS 34 Interim

Financial Reporting.

These condensed consolidated Half Year Report do not include all the notes of the type normally included in an annual

financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2017

and any public announcements made by Northern Star during the interim reporting period in accordance with the

continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim

reporting period.

a) New and amended standards adopted by the Group

A number of new or amended standards became applicable for the current reporting period, however, the Group did not

have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. There will

be some changes to the disclosures in the 30 June 2018 annual report as a consequence of these amendments.

3. SEGMENT INFORMATION

a) Description of segments and principal activities

The Group's Executive Committee consisting of the Executive Chairman, Chief Executive Officer, Chief Financial Officer,

General Manager Operations and Chief Geological Officer examine the Group's performance and have identified five

operating segments relating to the continuing operations of the business:

1. Paulsens, WA Australia - Mining and processing of gold

2. Kalgoorlie Operations, WA Australia - Mining and processing of gold

3. Jundee, WA Australia - Mining and processing of gold

4. Tanami, NT & WA Australia – Exploration and evaluation of gold mineralisation

5. Exploration - Exploration and evaluation of gold mineralisation

An operating segment is a component of the Group that engages in business activities from which it may earn revenues or

incur expenses.

Exploration compromises all projects in the exploration, evaluation and feasibility phase of the Group. These include the Mt

Olympus, Fortescue JV and Electric Dingo projects as well as ongoing exploration programmes at the Group’s respective

sites.

During the prior period the Group completed a sales process in relation to its Plutonic operations in WA, which is

consequently classified as a discontinued operation as at 31 December 2016.

An analysis of segment revenues is presented in note 4.

b) Segment results

The segment information for the half-year ended 31 December 2017 is as follows:

31 December 2017 Paulsens

Kalgoorlie

Operations Jundee Tanami Exploration Total

$'000 $'000 $'000 $'000 $'000 $'000

Segment net operating profit

(loss) before income tax (31,101) 55,061 108,667 (799) (1,883) 129,945

Depreciation and amortisation 40,837 24,912 24,272 137 - 90,158

Impairment - - - - 1,883 1,883

Finance costs 49 506 432 - - 987

Segment EBITDA 9,785 80,479 133,371 (662) - 222,973


Page 15



Kalgoorlie


$'000 $'000 $'000 $'000 $'000 $'000

Segment net operating profit

(loss) before income tax 7,710 72,298 53,296 (1,327) (1,369) 130,608

Depreciation and amortisation 12,891 23,570 33,557 - - 70,018

Impairment - - - - 1,369 1,369

Finance costs 50 459 384 - - 893

Segment EBITDA 20,651 96,327 87,237 (1,327) - 202,888


Kalgoorlie


$'000 $'000 $'000 $'000 $'000 $'000

Total segment assets 10,584 232,570 125,425 1,259 148,085 517,923

Total segment liabilities (11,715) (109,628) (76,375) (10,400) - (208,118)

30 June 2017 Paulsens

Kalgoorlie


$'000 $'000 $'000 $'000 $'000 $'000

Total segment assets 48,700 188,336 105,079 255 137,638 480,008

Total segment liabilities (19,039) (111,100) (77,593) (649) - (208,381)

c) Other segment information

(i) Segment EBITDA

Segment EBITDA is a non-IFRS measure, being earnings before interest, tax, depreciation and amortisation and is calculated

as follows: profit before income tax plus depreciation, amortisation, impairment and finance costs.

Interest income, finance charges, interest expense and acquisition costs are not allocated to the operating segments as this

type of activity is driven by the central treasury function which manages the cash position of the Group.

Segment EBITDA reconciles to profit before income tax from continuing operations for the half-year ended

31 December 2017 as follows:

31 Dec 2017

$’000

31 Dec 2016

$’000

Segment EBITDA 222,973 202,888

Other income 5,317 3,300

Finance costs (1,394) (1,341)

Depreciation (28,209) (12,117)

Amortisation (62,756) (58,064)

Corporate and technical services (14,407) (11,685)

Share based payments (8,278) (1,241)

Impairment of assets (1,883) (1,369)

Profit before income tax from continuing operations 111,363 120,371


Page 16


(ii) Segment assets

Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the

operations of the segment and the physical location of the asset.

Operating segments' assets are reconciled to total assets as follows:

31 Dec 2017

$'000

30 June 2017

$'000

Segment assets 517,923 480,008

Unallocated:

Available-for-sale financial assets 45,567 11,619

Investment in equity accounted associates 17,985 18,779

Derivative financial instruments 5,133 4,921

Cash and cash equivalents 360,190 390,868

Trade and other receivables 7,576 17,687

Property, plant and equipment 1,384 1,076

Total assets as per the condensed consolidated statement of financial position 955,758 924,958

Investment in equity securities (classified as available-for-sale financial assets) held by the Group are not considered to be

segment assets as they are managed by the treasury function.

(iii) Segment liabilities

Operating segments' liabilities are reconciled to total liabilities as follows:

31 Dec 2017

$'000

30 June 2017

$'000

Segment liabilities 208,118 208,381

Unallocated:

Trade and other payables 4,652 4,410

Provisions 7,332 6,910

Current tax liabilities 5,289 40,811

Deferred tax liabilities (net) 54,791 49,346

Total liabilities as per the condensed consolidated statement of financial position 280,182 309,858


Page 17


4. REVENUE

31 Dec 2017 31 Dec 2016

$'000 $'000

From continuing operations

Sale of gold 434,489 380,703

Sale of silver 860 970

Total revenue from continuing operations 435,349 381,673

From discontinued operation

Sales revenue - 33,812

Paulsens Kalgoorlie Jundee Total

$'000 $'000 $'000 $'000

2017 39,040 165,913 230,396 435,349

2016 50,822 172,897 157,954 381,673

5. OTHER INCOME AND EXPENSE

31 Dec 2017 31 Dec 2016

$'000 $'000

Profit/(loss) on disposal of property, plant and equipment 38 31

Interest income 3,867 3,031

Other 1,412 238

5,317 3,300

6. EXPENSES

(a) Cost of sales

31 Dec 2017 31 Dec 2016

$'000 $'000

Mining 93,496 90,407

Processing 39,863 34,875

Site services 11,296 9,017

Employee benefit expenses 65,052 44,339

Depreciation 27,904 11,954

Amortisation 62,117 58,064

Government royalty expense 10,421 8,898

Changes in inventory (8,700) (10,077)

301,449 247,477


Page 18


(b) Corporate and technical services

31 Dec 2017 31 Dec 2016

$'000 $'000

Employee benefits 5,612 5,857

Administration 9,743 7,155

Share based payments 8,278 1,241

Depreciation 305 162

Amortisation 639 -

24,577 14,415

(c) Impairment

31 Dec 2017 31 Dec 2016

$'000 $'000

Exploration and evaluation 1,883 1,369

1,883 1,369

(d) Finance costs

31 Dec 2017 31 Dec 2016

$'000 $'000

Interest expense 88 125

Provisions: unwinding of discount 987 895

Finance charges 319 321

1,394 1,341

Total expenses 329,303 264,602

7. TRADE AND OTHER RECEIVABLES

31 December 2017 30 June 2017

Current

$'000

Non-

current

$'000

Total

$'000

Current

$'000

Non-

current

$'000

Total

$'000

Trade receivables 3,254 - 3,254 16,084 - 16,084

Sundry debtors 3,539 1,570 5,109 287 1,570 1,857

Goods and services tax recoverable 3,985 - 3,985 5,296 - 5,296

Prepayments 4,000 1,813 5,813 660 1,938 2,598

Other receivables 2,050 - 2,050 1,927 - 1,927

16,828 3,383 20,211 24,254 3,508 27,762

8. INVENTORIES

31 Dec 2017 30 June 2017

$'000 $'000

Current assets

Consumable stores 14,884 13,409

Ore stockpiles 30,102 27,132

Gold in circuit 19,882 18,310

Finished goods – Doré 4,158 -

69,026 58,851


Page 19


9. EXPLORATION AND EVALUATION ASSETS

31 Dec 2017 30 June 2017

$'000 $'000

Opening balance at 1 July 137,638 98,420

Expenditure for the period 25,653 57,809

Acquired as part of asset acquisition (i) 13,136 2,917

Assets included in a disposal group classified as held for sale - (560)

Transfer to mine properties (26,459) (12,503)

Impairment (ii) (1,883) (8,445)

Closing balance 148,085 137,638

(i) Acquisitions

During the period, the Company completed the acquisition of the Western Tanami Project through the purchase of 100% of

the fully paid ordinary shares in Tanami Exploration NL from Tanami Gold NL. For details of the acquisition refer to note 16 to

the financial statements.

(ii) Impairment

At each reporting date, the Group undertakes an assessment of the carrying amount of its exploration and evaluation

assets. During the period the Group identified indicators of impairment on certain exploration and evaluation assets under

AASB 6 Exploration and Evaluation of Mineral Resources. As a result of this review, an impairment loss of $1.9 million (30 June

17: $8.5 million) has been recognised in the statement of profit or loss and other comprehensive income in relation to areas

of interest where no future exploration and evaluation activities are expected.

10. MINE PROPERTIES

31 Dec 2017 30 June 2017

$'000 $'000

Opening balance at 1 July 157,477 131,953

Expenditure for the period 55,224 138,010

Transfer from exploration and evaluation 26,459 12,503

Net transfer from property, plant and equipment 4,172 -

Impairment (i) - (4,923)

Amortisation (62,117) (120,066)

181,215 157,477

The above closing balance includes mine properties associated with the Millennium Project, which as at 31 December 2017

is yet to commence commercial production and consequently is not being amortised until commercial production

commences.

(i) Impairment

In December 2017, Paulsens moved into care and maintenance whilst new exploration work commenced as part of a

revitalisation plan. The commencement of care and maintenance represents an indicator of impairment. Consequently, the

Group was required to assess the recoverable amount of the Paulsens CGU at 31 December 2017. No other CGUs presented

indicators of impairment.

No impairment charge was recognised as a result of the impairment assessment at Paulsens, with the processing plant and

mine development assets having been amortised over the project’s mine life, and mobile fleet being reallocated elsewhere

within the Group's operations.


Page 20


11. BORROWINGS


Current

$'000

Non-

current

$'000

Total

$'000

Current

$'000

Non-

current

$'000

Total

$'000

Secured

Lease liabilities 5,885 6,474 12,359 5,541 5,677 11,218

Total secured borrowings 5,885 6,474 12,359 5,541 5,677 11,218

The Group had an undrawn $100 million revolving credit facility at the end of the reporting period.

12. PROVISIONS


Current

$'000

Non-

current

$'000

Total

$'000

Current

$'000

Non-

current

$'000

Total

$'000

Employee entitlements 25,077 1,102 26,179 20,595 1,247 21,842

Rehabilitation - 89,544 89,544 - 78,630 78,630

Other 2,747 - 2,747 2,546 - 2,546

27,824 90,646 118,470 23,141 79,877 103,018

13. CONTRIBUTED EQUITY

(a) Share Capital

31 Dec 2017

Shares

30 June 2017

Shares

31 Dec 2017

$'000

30 June 2017

$'000

Ordinary shares

Fully paid 603,171,969 600,542,315 229,749 217,811

(b) Movements in ordinary share capital

Details

Number of

shares

Total

$'000

Opening balance 1 July 2016 600,396,469 214,950

Employee Share Plan issues - 622

Performance Share Plan issues - 2,161

Exercise of options 145,846 78

Balance 30 June 2017 600,542,315 217,811

Opening balance 1 July 2017 600,542,315 217,811

Employee Share Plan issues 1,334,894 5,848

Performance Share Plan issues - 5,484

Exercise of options 1,294,760 606

Balance 31 December 2017 603,171,969 229,749


Page 21


14. DIVIDENDS

(a) Ordinary shares

201 31 Dec 2017 31 Dec 2016

$’000 $’000

Final dividend for the year ended 30 June 2017 of 6 cents (2016: 4 cents) per fully paid

share paid on 13 September 2017 (2016: 13 October 2016) 36,190 24,022

Special dividend (2016: 3 cents per fully paid share paid on 2 November 2016) - 18,016

36,190 42,038

15. COMMITMENTS

Gold delivery commitment

Gold for physical

delivery

(Ounces)

Weighted average

contracted sales price

(A$)

Value of committed

sales

($’000)

Within one year 156,500 1,761 275,668

Later than one year but not later than five years 114,000 1,734 197,678

16. ASSET ACQUISITION

On 28 November 2017, Northern Star completed the acquisition of Tanami Exploration NL from Tanami Gold NL. The total

cash consideration paid by Northern Star was $4.0 million.

The Group has determined that the transaction does not constitute a business combination in accordance with AASB 3. The

acquisition of the net assets meets the definition of, and has been accounted for, as an asset acquisition.

When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying

amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the

acquired assets and assumed liabilities as the initial recognition exemption for deferred tax under AASB 112 is applied. No

goodwill arises on the acquisition and transactions costs of the acquisition are included in the capitalised cost of the asset.

Details of the fair values of assets acquired as at date of purchase are as follows:

28 November 2017

$’000

Purchase consideration

Cash 4,000

Acquisition costs 203

4,203

Net assets acquired

Trade and other receivables 40

Inventories 55

Property, plant and equipment 976

Exploration and evaluation assets 13,136

Trade and other payables (74)

Provisions (9,930)

Net assets acquired 4,203


Page 22


17. FAIR VALUE OF FINANCIAL INSTRUMENTS

To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial

instruments into the three levels prescribed under the accounting standards. An explanation of each applicable level

follows underneath the table.

Recurring fair value measurements

Level 1

$'000

Level 2

$'000

Total

$'000

At 31 December 2017

Financial assets

Financial assets at FVPL

Australian listed equity securities 45,567 - 45,567

Derivatives

Derivative financial asset - warrants - 5,133 5,133

Total financial assets 45,567 5,133 50,700

Recurring fair value measurements

Level 1

$'000

Level 2

$'000

Total

$'000

At 31 December 2016

Financial assets

Financial assets at FVPL

Australian listed equity securities 8,370 - 8,370

Total financial assets 8,370 - 8,370

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and

available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price

used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter

derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as

possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument

is included in level 2. Valuation inputs include underlying spot prices, implied volatility, discount curves and time until

expiration, expressed as a percent of a year.

18. EVENTS OCCURING AFTER THE REPORTING PERIOD

Subsequent to the period end, the Company announced:

▪ an interim dividend of 4.5 cents per share to Shareholders on the record date of 28 March 2018, payable on 13 April

2018.

There are no other matters or circumstances that have arisen since 31 December 2017 that have or may significantly affect

the operations, results, or state of affairs of the Company in future financial years.


Page 23

Directors’ Declaration

In the Directors’ opinion:

1. the financial statements and notes set out on pages 8 to 22, are in accordance with the Corporations

Act 2001 including:

(a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory

professional reporting requirements, and

(b) giving a true and fair view of the consolidated entity's financial position as at 31 December 2017

and of its performance for the half-year on that date, and

2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when

they become due and payable.

3. at the date of this declaration, there are reasonable grounds to believe that the members of the

extended closed group will be able to meet any obligations or liabilities to which they are, or may

become, subject by virtue of the deed of cross guarantee.

This declaration is made in accordance with a resolution of the Directors.

BILL BEAMENT

Executive Chairman

Perth, Western Australia

19 February 2018


Page 24

Independent Auditor’s Review Report


Page 25

Independent Auditor’s Review Report

appendix 4d: half year report for the period ended 31 ... · 2/1/2018 · fmg jv exploration...

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