This morning the ASX's second largest gold miner, Northern Star Resources Ltd (ASX: NST) released its report for the half-year to 31 December 2014… and let me say, it was excellent.
Here are the 10 key takeaways from today's announcement:
- Revenue jumped 471% over the prior period
- EBITDA stretched 552% higher
- Net profit after tax, or NPAT, was up a staggering 573% to $51.1 million
- Earnings per share leaped 383%, from 1.8 cents to 8.7 cents
- Return on equity jumped from 7% to 17.6%
- Underlying free cash flow pushed much higher, from $6.5 million to $106.7 million
- During the period Northern Star sold 292,840 ounces of gold, up from 50,927 ounces in the prior period, at an all-in sustaining cost of $1,057 per ounce
- The average price of gold it received was $1,407 per ounce
- At 31 December 2014, it had cash of $49.2 million, whilst bank debt halved from $70 million to $35 million and it currently stands at just $20 million!
- It announced a 100% increase to its interim fully franked dividend to 2 cents per share (it'll be paid April 3 2015, with a record date of 31 March 2015) – taking the full year payout to 4.5 cents per share and placing the stock on a yield of 2.2%
Commenting on the results, Managing Director Bill Beament said: "The increased dividend and rise in the Company's return on equity from 7 per cent to 17.6 per cent half-on half are the most important measures of Northern Star's achievements…Free cash flow, dividends and return on equity are the ultimate gauges of any Company's performance. By contrast, growing production and revenue are of limited value if they don't generate increased returns for Shareholders."
Mr Beament summarised: "We aim to maximise Shareholder returns by generating strong cash flow from our operations and growth from exploration… Today's announcement demonstrates that we are achieving these objectives."
Is it too late to buy Northern Star Resources?
Northern Star is a fantastically run business with managers who have sound operational experience. This is exemplified by its ability to extract value for shareholders, from projects which others are unwilling to develop. We've noted this on a number of occasions.
In my opinion, its 11,300% (excluding dividends!) return over the past five years is unprecedented for an ASX-listed gold miner over the same period. However, despite its run-up in price, if you're partial to investing in gold and are willing to take on the inherent risk of a fluctuating gold price in your portfolio, then look no further than Northern Star or its larger peer, Newcrest Mining Limited (ASX: NCM).
Regular readers may remember that last year, we asked our specialist analysts to identify and compile a report on '3 high-risk under-the-radar resources stocks'. If you read that report (which was free) you'd know that Northern Star Resources was one of their top picks! It's safe to say, they dug up some great stock ideas.
