Northern Star Resources Ltd’s [ASX:NST] share price is down 15.67% today. The share price closed at $13.50 yesterday and is trading at $11.39 at time of writing.
Northern Star is an Australian gold explorer and producer with a $9.99 billion market cap. The company has projects located in Australia and Alaska.
There’s been a lot of excitement around gold explorers this year, as gold prices have been climbing. In fact, Northern Star has seen its share price increase by 29.50% in the last 12 months.
So, why is Northern Star’s share price down today?
In a COVID-19 company update released today, the company announced that they have had to implement ‘significant controls and requirements’ at all their sites due to the virus outbreak.
Northern Star Executive Chair Bill Beament said:
‘However, while these measures are essential, they are creating unavoidable disruptions to normal operations and affecting gold production.
‘There is al so the prospect of further restrictions being imposed on the movement of workers and suppliers in Western Australia and Alaska and therefore the Company’s outlook is becoming more difficult to predict with any certainty.’
The company has withdrawn its production and cost guidance for the 2020 financial year and expects that they could see production take a 10–15% hit in the March quarter. They’ve also made no assurances for the June quarter.
The company has also decided to delay their dividend scheduled for 30 March 2020.
What could happen next?
Northern Star isn’t the only company feeling the effects of the outbreak. Kitco News reported that in the last days as countries like South Africa and Canada have gone into lockdown, miners have had to close their mines.
The largest gold mining company in the world, Newmont Corporation [NYSE:NEM], has put four mines on care and maintenance.
Northern Star is one of the largest Australian gold producers. The closure of more mines and increasing movement restrictions from the outbreak could affect the gold supply.
Check out The Rum Rebellion’s Greg Canavan’s interview with author and gold expert Jim Rickards, where Jim explains why he expects gold prices could hit US$10,000 in the next years.