Shares of the ASX's fastest-growing gold miner, Northern Star Resources Ltd (ASX: NST), drifted 1.5% higher to $1.93 following the release of yet another strong profit result this morning.
In the year to 30 June 2015, Northern Star reported an 185% uplift in revenue and a 327% increase in profit, to $94.7 million.
Equally impressive was the balance sheet which showed the company holding $178 million in cash. That's up from $96 million a year earlier and came despite the company paying $82.5 million for the acquisition of the Jundee Gold Mine, $26.5 million in dividends and $50 million in exploration.
"Northern Star now has total flexibility and a host of options," Northern Star's CEO, Bill Beament, said. "We can implement prudent capital allocation while retaining our status as a growth stock on the back of exploration and development as well as the potential for further strategic acquisitions."
Despite the acquisitions and no debt (which can inflate many profit metrics), Northern Star achieved a return on equity (ROE) of 32%.
Total gold sold was 580,748 ounces, up from 210,055 ounces, at an All-in Sustaining cost of $1,065 per ounce (2014: $1,094/oz).
Total reserves, which is the most important measure of gold available for a mining company, climbed 26% to 1.5 million ounces. A further 2.7 million ounces were added to the group's resource base, to total 8.9 million ounces.
Another pleasing feature of the company's report was the final dividend of 3 cents per share, taking the full-year payout to 5 cents – up 43%.
Is it a golden opportunity?
In US-dollar terms, the gold price is currently around $US1,135 an ounce, but in Australian dollars it's $1,575 an ounce. The depreciating currency has helped keep many Australian gold miners alive and has pushed profit margins at other miners – like Northern Star – wider and wider because operating costs can also stay low.
Bearing in mind their dependence on volatile commodity prices, operational mishaps and limited resources, I try to keep my exposure to gold miners to an absolute minimum. However, if I were forced to pick one Australian gold-mining stock to own, Northern Star would be at the top of my list.
