Is Northern Star Resources Ltd the best gold miner for 2015?

It’s hard to believe that of the 200 companies listed on the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO), the best performing company for the 2013/2014 financial year would be a gold miner.

And yet Northern Star Resources Ltd (ASX: NST) has flourished in a period when gold miners have been brought to their knees with low gold prices. Northern Star shares are up 68% in the last 12 months after snapping up distressed mines and increasing production targets from 100,000 ounces annually to as much as 600,000.

Big cost advantage

Northern Star was one of the lowest cost producers for the recent September quarter with an All-In Sustaining Cost (AISC) per ounce of $1,043. This was just behind gold titan Newcrest Mining Limited (ASX: NCM) at $864 per ounce.

The company’s low-cost structure, including an ‘in-house’ mining contracting model, creates efficiencies and drives higher margins. Northern Star received $1,399 per ounce in the most recent September quarter, so took home a potential gross margin of 34%.

Outlook for 2015

Northern Star appears content with its new book of assets and the strategic focus now falls to exploration and growing the mines. The company has expressed its strong belief that it can leverage the new projects for an “enormous amount of high-grade, highly profitable gold”.

Northern Star will pump $50 million into exploration over the coming year and is already off to a strong start, recently announcing a high-grade discovery at its White Feather project.

So… should you buy?

Northern Star ranks as one of my favourite listed gold miners, if not for its strategic finesse, then for its consistent low cost production. The miner has committed to keeping costs down and is targeting all-in sustaining costs of A$1,050 to A$1,100 an ounce over the coming year.

A steadying gold price and weakened Aussie dollar into 2015 will help to keep Northern Star operating in the black and could see shares in the company climb further.

Don't buy Northern Star Resources until you have read this!... 

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Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned.

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