The Northern Star Resources Ltd (ASX: NST) share price has opened lower today after the Western Australian-based gold miner provided a business update in light of the growing impact of the coronavirus crisis on the economy and its business. At the time of writing, Northern Star shares have fallen 11.18% to $11.99.
Northern Star reported today that the company has put in place a strategy with major controls at all of its mine sites in order to maintain the safety of its workforce.
The company has also implemented a range of financial measures so it can ride out the current crisis as smoothly as possible.
People movement restrictions impacting workers and suppliers
Northern Star acknowledged that the strict restrictions imposed by state and federal governments on the movement of people are impacting its workers and suppliers in Western Australia and Alaska. Therefore, the company's financial outlook has been more difficult to predict. These restrictions could possibly be ramped up further in the weeks ahead.
As a result, Northern Star announced that it has decided to withdraw its production and cost guidance for the 2020 financial year ending 30 June.
The gold miner estimates at this stage that the disruptions to its operations will see a 10% to 15% fall for total production in the March quarter. Due to the rapidly changing business environment faced by Australia, the company cannot make any estimates of anticipated production level for the June quarter.
Northern Star also announced that it will be deferring its interim dividend due to be paid at the end of March. Instead, it now intends to pay the dividend of 7.5 cents per share at a later date this year on 27 October 2020.
By deferring the dividend payment, Northern Star believes that it will be in a much stronger financial position to weather the current coronavirus storm.
Strong financial position
Northern Star reassured the market today that it remains in a strong overall financial position, with a solid balance sheet and strong cash flow.
The gold miner reported that it had total debt of $700 million as at 25 March. This comprises a four-year term loan of $400 million and a further three-year revolving credit facility for the remaining $300 million of debt.
Northern Star's total funds sitting in cash on hand or in bullion awaiting settlement amounts to $534 million at the present time.
The gold miner has been one of the top-performing ASX 100 shares over the past year with a 49% increase in its share price during this time. Northern Star reported a strong set of financial results for H1 FY 2020, recording total sales of $827 million during the half. This was up a very strong 31% over the prior corresponding period.
