PERTH (miningweekly.com) – The share price of gold miner Northern Star took a tumble on Thursday after the company revealed it would spend a record A$76-million on its exploration budget for the 2020 financial year, along with a further A$116-million of expansionary capital.

The company reported a 31% increase in group resources, which now stood at 20.8-million ounces, after the depletion of 915 000 oz and 1.9-million ounces at the Kalgoorlie operations were shifted to unclassified, and removed.

Group reserves have increased by 35%, to 5.4-million ounces, after depletion of 915 000 oz, while the reserve grade also increased by 16%, to 4.4 g/t gold.

Executive chairperson Bill Beament said that the increase in the resource and reserve reflected the company’s highly successful strategy of investing in exploration to expand the inventory, which would in turn underpin organic production growth and increased financial returns.

“These outstanding results show that the Northern Star cycle of investing in exploration and development continues to drive the company’s operational and financial success.

“Not only have we grown our world-class reserve and resource inventory by one-third, despite mining nearly one-million ounces in 2019, we have increased the grades and the size of the crucial measured and indicated category. This sets us up for repeating the next stage of our cycle, which is another round of organic production growth and further increases in free cash flow.”

At the Pogo gold mine, in Alaska, Northern Star is working on increasing the ore reserve and resource position to return the project to its historical status as a Tier 1 asset.

Beament said that the Australian operations had also continued to deliver exceptional results, with Kanowna Belle’s resource growing by 7%, along with a 48% increase in grade, while Jundee’s resource grew by 7% and the overall grade at the Kalgoorlie operations increased by 45%.

For the 2020 financial year, Northern Star is targeting production of between 800 000 oz and 900 000 oz, with all-in sustaining costs estimated at between A$1 200/oz and A$1 300/oz. A further 60 000 oz will be stockpiled at Jundee, due to milling constraints, which Beament said meant that ore from the openpit mine at Ramone would not currently be processed during the year.

He said that options were being evaluated to crystallise the significant profits contained within the stockpiles.

“The 2020 guidance reflects consolidation of the record production levels achieved in the past financial year and the point in our growth cycle at which we transition from growing the inventory to investing in the next chapter of production growth.

“To that end, we have budgeted A$116-million for expansionary capital and a record A$76-million for exploration this financial year.”

Northern Star’s share price fell by 7% on Thursday, with the company trading at a low of A$11.75 a share.