I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.
Good morning, and thanks for joining us to discuss our first half FY25 financial results today. We'll be referring to the presentation as published on the ASX this morning, so I'll refer to the slide numbers there, and with me on the call today is our Chief Financial Officer, Ryan Gurner. We are excited to report record underlying earnings for a second consecutive period, which underscores the value of the profitable growth strategy that we embarked on in FY22. We are more than halfway through this strategy and are well positioned to deliver the end goal of two million ounces in FY26, which drives our superior returns. What is very clear is that this interim result again demonstrates the strength and value creation that we are embedding in our business.
Both EBITDA and return on capital employed metrics continue to improve, while the balance sheet remains strong and in a net cash position. This multi-year trend reflects our longer-term strategic lens we apply to all parts of our business. We believe this is a key differentiator for all our stakeholders at Northern Star, which we are very proud of. Northern Star offers significant gold price leverage to investors, and we continue to gain strength from the simplicity of our gold-only portfolio, with globally significant scale in the low-risk jurisdictions of Western Australia and Alaska. I thank our team for the effort and the commitment that delivered this excellent result. We remain well positioned to achieve our FY25 production and cost guidance while retaining a firm focus on progressing our key growth plans, including the KCGM Mill Expansion project, which remains on time and within budget.
With that context, I'd now like to hand over to Ryan Gurner, our Chief Financial Officer, who will discuss the results in more detail. Thanks.
Thanks, Stuart, and good morning, all. I'll now step you through the first half financials. I'd like to begin on slide four. Our key financial metrics for the group improved significantly on the previous corresponding period. The strength and quality of our assets is illustrated by the company delivering a record underlying EBITDA of AUD 1.4 billion for the first half of FY25, up 58% from the previous period. Maintaining capital prudency and the realization of tax synergies from the merger have resulted in AUD 1.15 billion of cash earnings, up 63% from the previous period. This record first half cash earnings has enabled the board to declare an unfranked interim dividend of AUD 0.25 per share. The company expects to generate franking credits from Q3, as mentioned in the second quarterly call, and therefore, subject to board approval, the final FY25 dividend is expected to be partially to fully franked.
In respect of the company's share buyback, we've bought back AUD 257 million in shares to date, and the program is open, subject to blackout periods until September 25. Over to slide five. Our balance sheet supports our strategy and gives us flexibility through the cycle to fund opportunities that may arise to enhance our asset portfolio to deliver long-term superior returns to our shareholders. We remain well positioned to deliver a profitable organic growth strategy with our strong balance sheet, which includes AUD 265 million net cash position at 31 December. We have significant liquidity of AUD 2.7 billion and maintain three investment-grade credit ratings. Over to our production overview slide on slide six. During the first half, the company sold 804,000 ounces of gold at an all-in sustaining cost of $2,105 per ounce, and we remain on track to meet our FY25 guidance. A key milestone was reached during the first half.
After many years of work by our team at KCGM, they've successfully completed the East Wall remediation. This now enables full access to the high-grade Golden Pike North mining area, which is key to lifting production in the second half. At Thunderbox, we're delivering nameplate throughput consistently, which is really pleasing to see. And at Pogo, with the major processing works completed in the half, this asset continues to deliver at the mine and mill, which is translating into great cash flow. Over to page seven. This slide highlights a significant cash generation by the business during the first half with AUD 124 million of group underlying free cash flow. The waterfall chart on the left illustrates the positive contribution from each production center to the group's cash earnings for the period.
Cash earnings for each production centre is represented by the segment EBITDA generated minus the sustaining capital spent at that centre. Pleasingly, all production centres contributed strongly with Kalgoorlie, our largest centre, comprising 60% of the group's cash earnings for the period. We will continue our focus on cost and productivity in the second half, which, alongside the planned lift in group production and with the current buoyant gold price, should translate into higher free cash generation. Now slide eight. We are pleased to have doubled our return on capital employed to 6.1% half on half. This reflects progress in our profitable growth strategy and focus on allocating shareholder funds to generate returns. This also highlights the strength of our first half underlying earnings before interest and tax, which is up 130% from the prior year to AUD 778 million.
Over to slide nine, which highlights EBITDA margins achieved by the group and each production center over the period. All three production centers performed strongly and achieved healthy EBITDA margins. A strong gold price and our focus on cost has delivered an EBITDA per ounce increase from $1,200 per ounce a year ago to over $1,700 per ounce this half. As illustrated by the graph on the left, Kalgoorlie production center continues as the key contributor at 52% of the group's EBITDA and is expected to grow with access to Golden Pike North at KCGM. In relation to our profitable growth strategy on slide ten, we are now three and a half years into our five-year strategy, and we have delivered major milestones which are key to us achieving our objectives.
With the progress made on our strategy and the capital investment undertaken in our operations, the business has generated over AUD 2.1 billion in cumulative operational free cash flow. As you will hear from Stuart shortly, we're also well progressed at our KCGM Mill Expansion project. Over to slide 11. Today, the board has declared a record interim dividend of AUD 0.25 per share, equating to a 25% payout of cash earnings. This dividend is complemented by our 300 million share buyback program, which remains active, demonstrating our purpose to deliver superior shareholder returns. Before I hand over to Stuart to finish the presentation, I'd like to step you through page 12, where we've set out our key elements of how we deliver shareholder value, which is through owning class world-class assets in tier one locations and applying our DNA of operational excellence.
Operating in a safe and responsible way with a demonstrated track record, a portfolio of long-life assets in well-endowed geological systems provides us with flexibility and optionality to extract value and employ capital prudently to where the best returns can be generated, and as an overarching foundation, we maintain a strong balance sheet, which enables the execution of our strategy through the cycle. Thanks very much, Stuart. Back to you.
Thanks, Ryan. Now to slide 13. I'm exceptionally pleased with the progress we are making on our KCGM mill expansion project, which remains on track and within budget. Our CapEx guidance of AUD 1.5 billion remains unchanged and is inclusive of that 10% inflation contingency. We also reiterate previously disclosed multi-year project CapEx guidance, which remains unchanged. We're now halfway through the three-year build, which we'll see the new plant commissioned in FY27. And as you can see on that slide 14, the team is very busy with lots of activity on site. We are at peak labor force and our camps full, which is great to see the activity and the action and the progress. In these photos, you'll see ball mill shells that have arrived on site.
There's plenty of activity in the primary crushing and milling areas, and the major concrete pours are on track and within over 50% of the total concrete pour today. I'd like to thank that project team and our contractors doing that work. They're doing a fantastic job, and we're very pleased to see that progress throughout the plan. To slide 15. On the 2nd of December, Northern Star announced that it had entered into the binding scheme of implementation deed with ASX-listed De Grey Mining, under which it proposed that Northern Star will acquire 100% of De Grey by way of a court-approved scheme of arrangement, and all eligible De Grey shareholders would be entitled to receive 0.119 new Northern Star shares for each De Grey share held at the scheme record date, so if approved by De Grey shareholders and the court, that scheme is expected to be implemented in May 2025.
Over to slide 16. This reiterates FY25 guidance, which remains on track. For the year, our production is forecast to be second half weighted, driven primarily by the increased grades at KCGM from the Golden Pike and the pit floor, and continued strong performance across both Yandal and Pogo operations. And please note there's also major shutdowns planned in this quarter three across all the assets, which was foreshadowed at the start of the year and inclusive of our guidance. Slide 17. Northern Star's exploration program remains highly attractive and a path to value creation. To support our purpose to deliver superior shareholder returns, and for the year ending March 2024, our cost of resource addition is a compelling AUD 31 an ounce. We're in a very enviable position where we have nearly 21 million ounces of ore reserves and over 61 million ounces of mineral resources.
This corresponds to our 10-year reserve back to production profile. So just finally on slide 18, that concludes the formal part of the presentation. I'd now like to open up to Q&A, so just hand back to the operator. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Levi Spry with UBS. Please go ahead.
Yeah, good morning, Stuart and Ryan. Thanks for your time. Maybe just a question on the returns piece. Can you just clarify exactly what you said there on the potential for the final dividend to be partially or fully franked and how you were thinking about potentially extending the buyback here, or are we waiting for De Grey and I guess the full integration of that in the portfolio for FY26?
Hey, Levi. Sorry, a bit croaky early. Hi, Levi. It's Ryan. Thanks for the question. Yeah, so yeah, so I said at the second quarter that we're looking to come back into a tax-paying position. So that's not changed. I flagged that for the Australian operations, we were going to be paying roughly AUD 60 million, I guess up to 30 June. And then just for completeness, Pogo, that is generating good money, is also paying tax, not relevant to franking credits, but is also paying tax. So $40-$50 million USD this half too. So then when we step forward, and you can see on the balance sheet of the company, there's AUD 140-odd million dollars of a current tax liability. So that relates mostly to this first half of the Australian operations. So there's a few moving pieces, and that's why we're saying partially to fully franked.
We will be starting to pay tax into that calendar year 2026 and beyond. What somewhat, I guess, not complicates it, but subject to De Grey completing, of course, then there's going to be a shield from that. Expectations aren't that we're not going to then not pay tax. It's just how much and what is the timing, I guess. As you know, tax is quite, I'll say, lumpy. So we're just waiting to see what happens in this six months, Levi. So probably towards June, I'll be able to give a lot more conviction update on where we're going to sort of land in that next 12 months and therefore the franking piece.
Yeah. And with the buyback, obviously, we've got to go through to September to complete that AUD 300 million. We'll evaluate the options after that with a lens on all methods of capital returns and superior results. So that'll be a decision after the end of the year.
Yeah, great. Thank you. Thanks for the detail. And maybe just a quick operational one. We're following your weather over there from over here. Can you just sort of talk us through how you might be prepared for a bit of rain to fall through the middle of WA?
Yeah. Yeah, most of that cyclone that's coming down is actually hitting De Grey. You can see it coming down the top into Hedland. So you see all those people exploration camps and all that have probably mobilised out this week up that part of the world. But there might be some rainfall out if it keeps coming down through the center of WA. But yeah, no different to anything we've experienced before. When our ramps get wet, we park up our fleets. We utilize our stockpiles. We let it dry out so we don't have to go back and do major repairs to that works and just from a safety perspective, and it usually dries out pretty quick. We've had some 45-degree days and some high winds around the Goldfields. So it doesn't take long for that to dry out, Levi.
Yeah, got it. Thank you. Thanks for your time.
Your next question comes from Kate McCutcheon with Citi. Please go ahead.
Hi, morning, Stuart and Ryan. Just fleshing out the buyback, given that De Grey shareholders receive Northern Star shares when that completes, is it fair to assume there will be no stock purchased until that closes in May sometime? And if that's not fair, then just what's the thinking there?
Thanks, Kate. No, they're independent. And to your point, you can do a slight calculation on that 0.119 ratio. And as we buy back shares, that ratio doesn't change. And therefore, there's some slight changes of the 19.9% of the De Grey shareholders of the combined business. But you do the math, you're into decimals, margins of decimals. So in the scheme of things of how dividends are paid and cash flow comes from that asset and future dividends on cash earnings, the contribution, all of that has been understood and considered. So I don't see there's material reason to change any behavior in relation to that.
Okay, got it. And then moving to the Super Pit. So we spoke at the quarterly that Golden Pike access was delayed by a quarter or so. And now you're back in there. And thinking about the next year or 18 months, is there scope to put more gear in there to get out more of those higher grade tons? I guess I'm trying to work out how to think about the delay and whether those impacts flow on or whether there's scope to catch up and we shouldn't get too hung up about it.
I'd probably say in mining, it's rare to catch up something, whereas the delay or timeout or pushing of that, it's always hard to say it can go faster. There's diversification of production from different areas, but all I'm saying is the pit floor we're in the good grade. We've managed that east wall very, very well, destacking that, and volumes are increasing of that higher grade material. So yeah, so our outlook is very favorable for the next five years in there digging that high grade pit floor, complemented with the growth from the undergrounds. And then obviously the mill expansion comes in and is supplemented with extra low-grade stockpiles. So yeah, I think we're talking about weeks and months, not significant stepbacks from where it is. But there's limited real estate down the bottom of that pit.
So I can send as many trucks as I like, but they'll be queuing. So we're just really careful around vehicle interactions and how much we put down there. So different to say the southern cutback where you can actually add more fleet and move more material when you get down the bottom of that pit floor. It is quite congested with that big fleet, so it's not a case of just throwing more gear. Very similar to like an underground, you just can't throw more jumbos and trucks or something and expect more meters. It's around efficiency, productivity, and managing those interactions closely.
Okay, makes sense. Thanks, Stuart.
Your next question comes from Matthew Frydman with MST Financial. Please go ahead.
Sure, thanks. Morning, Stuart and Ryan. Can I firstly ask on your leases and lease liabilities? So end of the half, AUD 360 million of lease liabilities and cash outflows from leasing expenses running at about AUD 220 million a year. Can we get a sense of how much of that sits in equipment, either at KCGM or maybe other long-life operations? And I guess how you guys think about whether there's any benefit in whether you convert some of those leases to Northern Star-owned equipment? Thanks.
Hey, Matt. Hey, Jay. Yeah, good. Yeah, so there's been a bit of an increase. There's a little note there in the financials about it. The Jundee Renewables project is effectively a power purchase agreement. So as you know, we've got four wind turbines there and a solar array farm. So that's been the completion piece and therefore onto the balance sheet as a liability this half. We also are looking at, well, we have also ordered some open pit gear to replace some of the hired gear that are used across the Yandal ops. So trying to obviously pay margin out when you hire things, so trying to get a better cost outcome there for the business.
And then, of course, as Mt Charlotte ramps up and has probably over the last one and a half to two years, grade there is also increasing with that more meters, more advance, etc. So across the business, you will see probably our grade, the grade held, move up over these next few years.
Okay, thanks for that, Ryan. And then maybe secondly, apologise, it's a pretty general question, but at Pogo, obviously we're about a month into the new administration in the U.S. Is there any sort of impacts or things to call out there that are affecting the operation or that you've seen over the last month or so?
Yeah, nothing material to what we've seen, but it's fluid, let's put it that way. And look, we've already had experience version one of this, and it really, I guess we endured through that. And so the tariffs and imposts around materials that have moved in or out, they were already there to exist. And U.S. content of supply, it is more expensive to get things in Alaska that aren't born out of the U.S. in the first place. And if they are, just the freight to get it up there as well makes it a challenge. So there was already levies on a lot of the stuff that comes out of Asia or Europe, which is a lot of our underground source for things that we do in Australia. So I think then back domestically, we don't have a lot of U.S. content supply.
So tariffs around that regard is not necessarily going to put pressure on those things. But in the U.S., it's kind of insulated given it's got U.S. cost base, U.S. revenue line, and a general higher cost of just getting stuff to Alaska in the first instance. So I haven't seen any structural changes. We're very alert to policies that are different to what we've planned around. But as you can start to see at Pogo, the margin there from where it's over $2,900 U.S. dollars an ounce, and all-in sustaining costs were $1,500 over margin, it's generating serious U.S. dollars, more than we acquired that asset for. I always said it would be knocking that out on a yearly basis. It's going to surpass that. So very happy with Pogo's not fragile.
And we might not like it, but it will be able to manage any of those structural changes that potentially can be imposed over coming years.
Yeah, thanks for the insights, Stuart. Obviously, pretty fluid situation. Anything maybe to call out in terms of labor access or workforce? I mean, obviously, it's probably something that affects the southern states more than Alaska, but yeah, anything to call out there?
We haven't seen it. Again, we haven't seen any problems there. I think if anything, we've got a pretty motivated team that have seen success through their own hard work. They've been rewarded well. They've got benefits that they don't typically get across other operations that we've sort of brought into that asset over the years. Simon Jessop's over in Alaska at the moment, Jim Coxon and the team. They'll come back with another further outlook and update. We're looking at what's a pretty bright future at Pogo. Yeah, looking forward to getting out of the winter months, getting new portals established down near the airstrip there, getting into access as they take us out under the river through to Goodpaster. The overall plan of what we can do beyond the current plans at Pogo is pretty exciting.
Yeah, got it. Thanks for the insights, Stuart.
Thanks, Matt.
Your next question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Hi, Stuart and Tim. First question is, you flagged shorts obviously this quarter or reiterated them. Can you just talk about if those shorts already occurred, and if so, how does that go?
No, look, it goes when liner is run out and you've got to replace them. And I think even Jundee, for instance, has got a shut right in the last week of March. So yeah, not ideal, but it is when it is. And all we say is we do those sort of quarter one, quarter three. So quarter one's a larger shut. Quarter three is a mini shut across most of our plants. And we also highlighted we took Pogo to a three-shut scenario so that we could do sort of mini relines. So we're just flagging it to say we've reiterated our production and our cost guidance for the full year, second half weighted. You're going to tell me quarter four is going to be a good one. We see the risks you see.
It's hinged largely on grade and ounces coming out of Golden Pike, out of the Super Pit floor. Essentially, the rest of the assets, we're very pleased with how they're tracking against their plans. Yeah, it's progressing great, not without the risks and the weather and things like Levi asks. They're all usual parts of our business. Yeah, with the outlook, all these things are still on an upward trajectory as we go to two million ounces and beyond and with a mill expansion. If we're successful with the grade, we've got exciting outlook over the next few years with very strong leverage to gold price.
And separate question just on mills, maybe the Yandal mill. How is that going with throughput and reliability post-quarter run?
Yeah, so it's that nameplate saying six is reliably delivered. We obviously know it can do more, so we're not stopping there. And so it's, yeah, just getting the stability into it. So you're very pleased with its performance today. And there's no issues there at Thunderbox.
Thanks, Stuart.
Thanks, Dan.
Your next question comes from David Radclyffe with Global Mining Research. Please go ahead.
Hi, good morning, Stuart and Ryan. So a non-accounting question from me. Just on the midterm production profile, and just to come back to this, because obviously at today's price, there should be good upside to extend the shorter mine life assets in the portfolio post the end of this decade. So appreciate you spending a lot on exploration, but do you need to consider maybe raising the gold price assumptions or investing some capital now in the good times to develop that optionality within those? So thinking outside of KCGM and potentially De Grey here, it's just good to understand what your thinking is here and maybe which of those shorter mine life assets you think have the better potential and stand out.
Yeah, thanks, David. So we do our resource reserves sort of close out on the end of March. So a lot of that work's underway and the valuations are underway for that. And I think you're right in saying you relook at those gold price assumptions for resources and reserves. You go back to what we were using. They're less than half of spot price. So it's important that we consider those things, but it's more driven by costs. And we've seen costs escalate, the rising cut-off grade. We then put in that revenue line to ensure we've got those embedded returns in those ounces we're seeking. I'm not going to get changing prices to add book ounces that then grow resources or reserves and add it on the end of these lives.
You've seen the behavior of the last few years of us investing in our already longer life, but lower costs mines and also trying to get the economies of scale to lower the costs on the global cost curve and start in the first half. So I think you're right in this, like I've said before, these pop-up shops where there's at this gold price, lots of mines can start or extend, but then they are fragile if there's retracement of pricing. So we're very careful to not do that. But I think you're going to see a bit of that across the sector where ounces that can be mined and made money in this period. I think if you can pull it out in the next year or two, that's pretty wise.
If you're trying to add year 10, 11, 12 based on today's gold price, I think that's a bit of accounting magic. So I think we'll leave that one alone.
Okay, so thanks. So there's no, I guess, obvious capital projects you're talking about because the risk is obviously you're successful, as we'll hope on De Grey, and then you're putting money into that, and then there's potentially not surpluses to then put into those older assets. Is that the way to think about it?
No, our growth strategy that we embarked on from 2022 is addressing all of those opportunities that we saw at a much lower gold price that is just more greatly enhanced by the current gold price. So the AUD 1.5 billion KCGM mill expansion from 13 to 27 million tonnes per annum, the view and the attitude around those was done. It was AUD 2,700 an ounce or an IRR of 19%. You start running spot through it, it enhances it. So we don't have to do much more. We can look at resources, reserves, put it on paper, but ultimately the hardware of our plants, the mining activity and going through the plants to derive a gold bar, we've already done multiple times at both Jundee, Thunderbox, now obviously Fimiston is underway. I've just said there's a window at Pogo with an opportunity to do more.
And then when you look at De Grey, they've already got a 10 million ounce first plan with a 15 million tonne per annum upgrade option in their thinking on the equipment sizing that they've ordered. So I think it's we did this years ago. We're not suddenly pondering on what we do next if the price stayed or increased $1,000. This is all enhanced on things that we're already three years ahead of everyone else in the thinking and investment in that regard.
Great. Thank you. That's really helpful. Well, possible.
Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Morning, Stuart and Ryan. Thanks for the update. Just a couple of questions from me, please, and again, sorry in advance for asking a lease accounting question, but just following on from Matt's comments before just around the renewals projects and lease additions, can you just remind us where those projects are at, how much we might expect that liability to keep increasing in the second half, and then just what the cost savings you're expecting to come out of those PPAs look like?
Thanks to you guys, Ryan. Yeah, don't expect so the renewables at Jundee, as I mentioned with Matt, don't expect that to increase because that's an over-the-term cost. So that's a fixed PPA. So don't expect that to increase. So that's the single largest renewable project the company's done. There's been some smaller scale solar farms done at Carosue Dam, and there's similar things planned at Thunderbox to be, I guess, installed in the future. So don't expect that to increase. Obviously, there's a very potential large scale wind and solar project that we're considering at KCGM, but that's a little bit away yet. So yeah, so don't expect that to increase. You know, going out in the first half. I spoke about the equipment. They're obviously leases too. We've typically bought gear through a lease. There's increases with the open pit.
As I mentioned, we're looking to replace some high grade, and then obviously with the underground ramping up at Mt Charlotte, expect that to sort of feature there.
On a unit cost, you're going to see no worse and potentially improved, but marginally. So on a net-net basis, it's going to stop escalation of volatility around carbon-intensive energy generation, but it's going to be the PPA as a consideration. All of those things is to pretty much stabilize power. So net-net dollars is pretty similar, but obviously the set-off and the motivation has largely been around decarbonization. We said we have that 35% reduction by 2030, and we've got 70% of our emissions come from those power generation sources and grid, which these are doing. These are underway to replace.
Excellent. Thanks for that, guys, and then just to ask another one on capital management. I'm sorry to push the point after a few questions already, but you're not extending the buyback. You've only got AUD 43 million left in that program, having spent AUD 85 million last half, despite half of that being in blackout. On your reported metric, your net cash liquidity is AUD 2.7 billion, comfortably covers the acquisition if that completes before considering the cash you'd also acquire. So I guess to Kate's question, it sounded like the buyback and the acquisition are independent, so how do we, I guess, interpret that? Do you see maybe higher returning opportunities on a six-month view, or is it just not a priority at the moment in terms of the capital returns, and it's kind of a see how some of these projects go before you start to consider ramping that up.
Yeah, so we've got until September to complete that buyback. And when it doesn't mean like we've done historically, it'll be opportunistic as we've utilized that. And we're also restricted by those blackout periods. So we're not going to talk about a new or an extension or an uplifted buyback until we've completed by time or money the current one. Yeah, so just that's the process that we're running through. But I think the sensible time is after the full year accounts to assess all of that, plus the knowledge of De Grey's in or out. Our capital projects are understood. All those things are there. The half yearly, I think it would be a bit cute to come out now and boost up a buyback. I think that's getting a bit cute. And I think across the sector, you're hearing global peers do that. They work on calendar year.
So they're at their full year, if you kind of appreciate that. So majors today that have announced buybacks, that's on the end of their full year account as opposed to us sitting in an interim.
Yep, no, that makes sense. Thanks for that, Stu. And then just last one, if I can squeeze a third in, can you just remind us the moving pieces that go into adding that sort of 500,000 tonne per year step up at the undergrounds at KCGM and sort of the timeline to execute and get new equipment and all those sorts of things?
Yeah, so quarterlies, you'll see in the back pages on the development meters, and quarter on quarter on quarter, they've just been building and adding, and it's just opening up tons of vertical meter across Mt. Charlotte, and all those new portals being established inside the Super Pit and access along between Super Pit and Mt. Charlotte, which is Mt. Ferrum, etc., and you just start to see those meters being delivered, so we'll be sort of seven, eight, nine kilometers a quarter coming into those areas, opening up those large tons, and the stoping tons come off the back of that, and the outlook is 500,000 tons per annum addition as we grow from two to four million tons per annum from that.
And then obviously when the Super Pit at the Golden Pike gets exhausted, Fimiston starts to really contribute and turn on, but the development will be in place in advance of that. So there's plenty of charts in there showing sources of weighting between stockpile, open pit, and underground. But we haven't given the granularity of zones or areas or meters. It's a big beast, and we'll fill it up with the best material we can put in it.
Fantastic. Thanks for that extra color. I'll pass it on.
Your next question comes from Mitch Ryan with Jefferies. Please go ahead.
Thanks, guys. My question just relates to the KCGM mill expansion. I'm just wondering if you can expand on that. Stu, obviously we've seen in the region smaller mills that have come in ahead of schedule and under CapEx budgets. Is it too early to sort of give comment? You sounded quite happy with the progress today, but are you seeing how are you seeing things on a capital spend relative to expectations and also timing relative to expectations?
Yeah, thank you. I don't know which mill came in under schedule and under budget. Might have been Clarkie or Capricorn, I don't know. But I don't see us coming in under timing or under money. We'll get what we ordered and built as planned. And as I probably forecast right at the get-go, contingency was basically allowance for escalation on things that weren't completely designed or secured through an order number or float on labor costs and hours. And so I expect we will consume that. Hence, why we've told people that. I'm happy with the progress to date. It's still working very closely with our contract partner to make sure we're doing it, and we're in the thick of it right now. But you don't take your eyes off that. So there's still a lot of work to do.
I'm just pleased with where we're positioned on the quality that's occurred and the progress that's being made. But we've still got nearly 18 months to run that through. So yeah, we're a bit early to call either way, but I'm pleased with where we're at.
Okay. Cheers. Thanks, guys.
Your next question comes from Al Harvey with J.P. Morgan. Please go ahead.
Yeah, morning, team. So I suppose you did mention you're still progressing towards that five-year, two million-ounce target by FY26, so just under 18 months away. I suppose when you got Hemi coming in, mentioned the upside at Pogo with the exciting upside there. Guess I'm just trying to get a sense of when we might be looking at timing for the next five-year plan and directionally where group production could go to. Notwithstanding, obviously, you do have 18 months on the current one left to go. But yeah, are we kind of thinking post-financial full year results this year, or could it be a bit earlier?
Yeah, thanks. Look, we're definitely thinking around that, but we've still got a bit to do to deliver the existing one. And I don't want to recut people's focus or direction on those things that we've done a lot to deliver what we said we would do, and that's what we want to do. Look, it will be that it'll be on that full year. And whether it's pre-Diggers or around that full year results call is when that strategy and our guidance typically comes out. So whether that's one year or whether that's greater years, we'll consider all those things. But I appreciate people want as much visibility as they can. But at that point, we'll obviously know how this year was delivered. We'll know De Grey is in or out. We'll know our resource reserve update.
So it's a more complete picture as opposed to going a bit early again and lots of arm waving. We're careful about that.
Sure. Thanks, Stu.
Your next question comes from Baden Moore with CLSA. Please go ahead.
Good morning, everyone. Just a question, really just following up on some of the investor focus on the buyback. If I look at your cash movement through the first half, it looks like you actually went backwards on cash through the six months despite the strong commodity price. Appreciate you reinvesting a lot of money, but that also included a AUD 200 million gain on your share sale. Just wondering, do you think it's appropriate? Are you thinking about extending a buyback while you're not generating excess cash, or do you think that in the second half you're going to see a material turnaround in that cash growth?
Yeah, so we're not extending the buyback. We're just reiterating the buyback has until September 2025. And we're, what is it, 257 million complete on that. So there's only 43 remaining through to September 2025. So questions on the call saying, will we lift it? Will we extend it? We're saying that decision will come at the full year results in July, August. But to your point, we're investing for returns, superior returns, and people can see our CapEx guidance. You can see increased return on capital employed metrics as we are delivering those organic projects. So yeah, absolutely. And a strong net cash position and balance sheet. People can appreciate the money's going back in. But I think today's AUD 0.25 a share dividend and cash earnings of AUD 1 a share demonstrate the health of the business to support those returns.
Our policy with dividends doesn't change with the inclusion of Hemi should that occur through this year so that people get immediate returns from that if they come on board from De Grey shareholders. So all those things, there's not many companies that are doing all those things: organically growing, margin expansion, dividend paying, buybacks, inorganic M&A that's accretive. We've paid back to shareholders to date AUD 2.3 billion through dividends and buybacks. So I think, yeah, have a good look at the history and the outlook. It's in a good, enviable position.
No, no, no. Forgive me. I'm not suggesting the balance sheet's weak. I just think when we're thinking about potential signals for where you have the additional liquidity you may need, do you think you'll need to see a turnaround in that cash generation, or do you think you'd be happy spending out of the capital you've got at hand?
I don't know what you mean turnaround in cash generation. We're up 63% cash earnings period on period, and it's gold price stable. It's still going up.
Just your net cash went from AUD 1.1 billion to AUD 1 billion in round numbers?
Through investing. Yeah.
Yeah, it's the outlook. It's the outlook. So obviously, as Stu's saying, yeah, there's money putting into this business for the future. We see the outlook, and our behaviors and our actions are based on the outlook. So the half change is right, right? But when we think about our buyback and think about all the dividends we're paying out and the future, we look at what the outlook is. So the strength of the outlook is there. That's why we have the buyback, even though, yeah, our cash position is moving quarterly, half yearly. We see the outlook. So that's how we judge our actions, our behaviors is on that outlook.
But on the full year guidance, I mean, growth capital's AUD 950 million-AUD 1,020 million, over a billion dollars in growth capitals, plus the KCGM Mill Expansion, AUD 500 million-AUD 530 million, which is understood and known, plus exploration at AUD 180 million. That's pretty clear on what was going into the ground from cash flows. Plus, you'll appreciate the hedgings being unwound. And that's the average realized gold price isn't spot, but that's improving as well across the period. So I think point taken, cash goes backwards, but it's lumpy, as Ryan pointed out with tax and timing and capital at the moment.
Yeah, and it's going back because we're paying dividends out. So we're giving the money back to, rightfully, shareholders.
Thank you.
Your next question comes from Levi Spry with UBS. Please go ahead.
Thanks for the extra one. It's a good time to be a gold miner. I think you reaffirmed the two million ounces for next year, Stu. I just want to confirm that that's not a run rate to reach through the year. And I guess it's pretty material growth from this year, year on year, if maybe we're heading to sort of the mid to lower end of current guidance. So can you just maybe remind us of the drivers from the two key centres, Kalgoorlie and Yandal, year on year, as we look forward?
Yeah. So we'll obviously put our FY26 guidance out with our results in July. And it's never a point. It's a range. And our strategy is to deliver two million ounces, which is a checkpoint on the way through to the mill expansion, additional, and other things that are coming. So that was 300 out of Pogo, 600 out of Yandal, 1.1 out of Kalgoorlie, which was inclusive, I guess, of that 650 from KCGM. And so KCGM is the final step-up piece from where it was last year, 450. We're obviously trying to get 550 this year as a group, is what we're confirming our group guidance at an asset level that might be contributed from different areas because we've got that flexibility, diversification. But absolutely, that's the outlook.
And ideally, we have a good window to that in the run rate of quarter four, this quarter four, to show what these assets can do as well.
Yep. Got it. Thank you.
Your next question comes from Simone Grogan with The West Australian. Please go ahead.
Hi, Stuart and Ryan. Thanks for taking my question. A labor-related question from me. I was just wondering, just in terms of the salaries and what Northern Star is offering, do you think they're competitive enough to compete with the iron ore majors up in the Pilbara? Just thinking in terms of staff for Hemi build and once operations start.
Yeah. Good question. Look, consideration around the Pilbara, it certainly will have the labor pool of the—let's not say the labor pool, but the expectation of trades up there may be a bit different. If you consider our current operations in Kalgoorlie, we have a large residential workforce. So when you tap into that fly-in, fly-out workforce going anywhere, particularly Pilbara, but I believe that that's all absolutely being considered in the definitive feasibility studies, assumptions, etc., that De Grey published. So I'm not concerned that's going to be changed. I think it's accurate and it's been considered. And it's what feeds into it. And I think the other part is just there's been relief across labor in the state in the recent years. So I think that that also assists in just keeping that normalized and not continuing to ramp.
Thank you. And I was also just curious on the DEI front. I don't believe Northern Star has a workforce gender diversity target set as such. Just thinking if you'll obviously increase in scale, assuming that the De Grey deal goes ahead, and then just sort of in the rhetoric that's coming out of the U.S. regarding DEI, there's a lot of sort of moving pieces on this. I just wondered where Northern Star was sort of at with targets and your approach to this subject sort of on the whole.
Yeah. So we've always fostered inclusion. So our focus has been on creating inclusive workplaces and considering where it's difficult or challenged or there's barriers and work to remove those and bring that in from an inclusion perspective. I've never worked from pick a number and try and drive to it because you can get different outcomes. So yeah, we've got team inclusion across our company with workforce suggestions like we do, say, safety reps that go in, feed into that information to improve safety policy and procedures. So yeah, multiple years driving that through our culture. So I don't see us pivoting or changing related to other global views. It works in our company. We're pleased with it. And our attitude is to always be improving it like we do on the safety front.
So yeah, I think it's still got work to do, obviously, and we think about it.
There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks.
Great. Thank you so much for joining us on the call today. And I look forward to updating you all as we continue to advance our profitable organic growth strategy. So have a great day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.