Northern Star Resources share price jumps after record results

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.

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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.

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