Northern Star Resources share price jumps after record results

The Northern Star Resources Ltd (ASX: NST) share price jumped 5.7% to $3.93

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Northern Star Resources Ltd (ASX: NST) share price jumped 5.7% in early trading to $3.93, after the gold miner produced an outstanding first half result.

One of the few gold miners (and even miners in general) to pay a dividend, Northern Star even upped its interim dividend by 50% to 3 cents, fully franked.

Here are some more of the highlights…

  • Revenues of $425.3 million, up 3% compared to the first half of the 2015 financial year (1H FY15)
  • That was on the back of the sale of 283,573 ounces of gold at an average price of A$1,497 an ounce
  • Net profit after tax rocketed up 79% to $65.1 million
  • Earnings per share of 10.9 cents, up 76% over 1H FY15
  • Cashflow from operations up 35% to $173.4 million
  • Cash, bullion and investments balance almost doubled from $119 million a year ago to $226 million at the end of December 2015.
  • All-in sustaining costs (AISC) of A$1,062 an ounce (US$750 an ounce)

Managing Director Bill Beament said, "These results demonstrate the cash generating capacity of Northern Star based on our current production rate of ~570,000 ounces a year. But more importantly, they highlight the free cashflow Northern Star is set to generate as production grows to 700,000 ounces a year over the next two years".

He also added, "Northern Star could be well on the way to generating A$450 million a year in operation cashflow" (~30% more than annualised interim cash flow).

Northern Star has had a stellar few years since it acquired the Paulsens mine in July 2010 for just $40 million. At the time, it was expected to have an eight-month life, but Paulsens is still producing – six years later. As a number of global gold miners sold out of their Australian gold mines when gold prices fell from above US$1,500 an ounce in 2013, Northern Star saw its opportunity and added another 4 gold mines to its stable at dirt cheap prices.

Where to from here for Northern Star?

The miner is forecasting production of between 535,000 and 575,000 ounces of gold at an AISC of A$1,050 and $1,100 an ounce (US$745 to US$780/oz). With gold prices currently around US$1232 an ounce, Northern Star looks set to produce another record year – with shareholders likely rewarded with more fully franked dividends.

Foolish takeaway

Northern Star's share price isn't cheap – but the company has consistently produced the results promised in the past – unlike many other gold miners. As a result, it could be the pick of Australia's listed gold producers.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »