Northern Star Resources Share Price is Up on Record Profits (ASX:NST)

Northern Star Resources Share Price is Up on Record Profits (ASX:NST)

The share price of one of Australia’s largest gold miners Northern Star Resources Ltd [ASX:NST] has opened strongly today thanks to record profits recorded in its half-year results.

At time of writing the NST share price is up 52 cents or 4.37% to trade at $12.42 per share.

ASX NST Share Price Chart - Northern Star Resources

Source: Tradingview

Despite the slump in the gold price over the past six months, prices still remain at historic levels, paving the way for NST record profit.

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The gold miner said it would share the profits with shareholders, bumping up its interim dividend to 9.5 cents.

Northern Star to become two-million-ounce miner

Today’s announcement will be NST’s final results release as a stand-alone company as it is set to merge with Saracen Mineral Holdings Ltd [ASX:SAR].

The gold producer announced a record net profit after tax of $194.4 million for the December half, up 63% from previous corresponding period.

Statutory net profit rose 46% to a record $184.5 million and the interim dividend will be increased by 27% to 9.5 cents per share, fully franked.

The boost to profits is thanks to 480,431 ounces of gold sold during the half at an average price of AU$2,386 per ounce.

A price similar to the current spot price of gold.

Although, 39% of gold sold into their hedge book.

But NST say they plan to reduce hedging to ~10% over the next three years of production.

Meaning the miner might be more upbeat about the outlook of gold over the short- to medium-term.

With Australia doing relatively well coping with COVID-19, NST say they are on track to meet FY2021 production guidance of 940,000–1,060,000 ounces.

And this production level is set to double upon the merger with SAR.

Growth proceeding as planned

Executive Chair Bill Beament said the record performance showed the NST growth strategy was proceeding to plan:

The record EBITDA of A$472M demonstrates that our growth plan is delivering superior results. This result came despite investing A$108M in exploration and expansionary capital and directing 39% of our gold sales into hedges, which meant revenue was over A$100M lower than at spot prices.

After the Saracen merger is implemented on 12 February, our combined operations have a clear pathway to an annual production rate of 2Moz.

This growth will be driven by organic sources and incur one of the lowest capital intensities in the industry, ensuring that it is not just strong growth but is also financially-rewarding growth.

It will also mean that Northern Star is growing at a time when so many of our global peers have flat or declining production and inventories.

And it’s not just SAR that is bullish on the price of gold. Our resident gold expert Shae Russell reckons other Aussie gold stocks could be set to spike too as Australia becomes the next ‘gold epicentre’. If you want to learn more, download your free report here.



Lachlann Tierney,

For The Daily Reckoning Australia