NST.asx
Buy
Quick Note – Hartleys Research
What happened?
Ashburton Resources Increases 50% to 1Moz
 NST has released a new resource estimate of 11.588mt @
2.7g/t Au for 1.007Moz gold for the Ashburton Project, WA.
 Key highlights from the updated resource include:
o 51% increase in total contained ozs up from 668koz;
o 246% increase in contained Oxide and Transitional ozs;
o 20% increase in contained Sulphide ozs;
o 40% increase in Measured and Indicated ozs;
o The resource was calculated at a bottom cut-off grade of
0.7g/t for the Mt Olympus ore-body and 0.9g/t Au for the
other deposits.
 Maiden ore reserve of 53koz (@ 3.7g/t Au) for the free-milling
ore (Oxide and Transitional).
 The resource is an interim estimate, with many of the deposits
open along strike and at depth; drilling is on-going.
OLD
Ashburton - Dec 2003
Oxide and Transitional
Sulphide
Total
Category
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Tonnes
Grade
(g/t)
Oz Au
611,000
342,000
237,000
1,189,000
901,000
1,070,000
3,984,000
5,956,000
1,512,000
1,412,000
4,221,000
7,145,000
2.4
2.5
2.3
2.4
2.8
2.7
3.1
3.0
2.7
2.6
3.1
2.9
47,000
28,000
18,000
92,000
82,000
92,000
402,000
576,000
129,000
119,000
420,000
668,000
Ashburton - Dec 2011
Oxide and Transitional
Sulphide
Total
Category
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Tonnes
Oz Au
655,000
1,425,000
1,995,000
4,075,000
1,057,000
1,156,000
5,300,000
7,513,000
1,712,000
2,581,000
7,295,000
11,588,000
2.4
2.6
2.3
2.4
2.6
2.4
3.0
2.9
2.5
2.5
2.8
2.7
50,000
120,000
148,000
318,000
86,000
90,000
513,000
689,000
136,000
210,000
661,000
1,007,000
Brief Business Description:
WA gold producer and explorer
Hartleys Brief Investment Conclusion
Strong margin gold producer. Unhedged with
a quality portfolio of projects. Investigating
production growth to 200Kozpa.
Chairman & MD
Chris Rowe (Chairman)
Bill Beament (MD)
Top Shareholders - Est
Investmet Limited
Paradice Investment Management Pty
Ltd
Mr Michael George Fotios
Company Address
24 Mumford Place
Balcatta WA 6021
Issued Capital
- fully diluted
Cash - est
Debt - est
EV
EV/Resource Oz
EV/Reserve Oz
6%
329%
722%
246%
5%
-2%
28%
20%
5%
76%
57%
51%
What does it mean?
Resource growth lays foundation for production growth
 NST plans to truck free-milling ore from the Ashburton project to
the Paulsens mill, a distance of over 200km to provide additional
ore for the expanded Paulsens operation, for production towards
100kozpa.
 The new updated oxide and transitional Ashburton ore is now
Prod (koz Au)
Cash Costs (A$/oz)
Op Cash Flw
NPAT
CF/Share (cps)
EPS (cps)
P/E
Resources (Moz Au)
Reserves (Moz Au)
10.2%
5.8%
4.0%
400.2m
427.1m
$364.2m
$388.7m
$80.0m
$0.0m
$284.2m
$214/oz
$1712/o
z
- fully diluted
Market Cap
NEW
Grade
(g/t)
2 Apr 2012
$0.910
$1.01
$1.27
Share Price
Valuation
Price Target
FY11
a
FY12
e
FY13e
89
588
78
16.3
17.2
6.3
14.5
78
663
73
35.8
15.0
9.5
9.5
90
601
94
51.4
19.0
12.5
7.3
1.33
0.17





318koz up from 92koz, with over 53% in the Measured and
Indicated resource categories, which bodes well for increased
reserves prior to mining.
The Ashburton project has considerable exploration upside with
many deposits open along strike and at depth, with numerous
walk-up drill targets.
The Sulphide ore at Ashburton is refractory and will require the
development of a standalone onsite processing facility, which
NST believes could provide another 100kozpa (lifting Group
production to 200kozpa).
With overall gold recoveries of 80% expected from the sulphide
ore, NST has accelerated resource drilling and further met-testwork; development can be internally funded.
Ongoing drilling is currently focused on infill and extensional
resource activities at Waugh, Zeus and Mt Olympus; assays are
pending.
NST will have to pay a 1.75% royalty on future production in
excess of 250koz.
Hartleys Initial View
 The growing resource inventory is good news for NST,
especially as the update has provided a significant increase in
free-milling (oxide and transitional) ores, which can be processed
through the Paulsens milling infrastructure.
 We expect future resource and reserve growth to come.
 With solid production at Paulsens (+80Koz in CY2012) at
attractive cash costs, accelerated on-going exploration, cash of
A$80m, we continue to rate Northern Star Resources as a Buy,
with a valuation of $1.01 and 12-month price target of $1.27.
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