Northern Star Resources Ltd (ASX: NST) today reported its half-year result to the market.
Here are the key takeaways from the gold miner's report:
- Revenue fell 2% to $415 million
- Net profit rose 61% $104.6 million
- 246,229 ounces of gold was sold at an average price of $1,683 per ounce
- $61 million was invested to boost production to 600,000 ounces next year
- The company's all-in sustaining costs (AISC) came in at $1,076 per ounce
- Total company cash and bullion stood at $303 million
The $2.7 billion gold miner said its performance proved the short and long-term objectives of the company.
"We have generated significant profit growth and maintained some of the highest financial returns on the ASX while investing heavily in our expansion strategy," Executive Chairman Bill Beament said. "We are very confident that we will generate both strong returns on the capital we are investing in these growth projects and significant increases in overall cashflow as we ramp-up to 600,000ozpa next year."
The company declared an interim fully franked dividend of three cents per share, equal to last year's payment.
"We are retaining a robust cash balance and maintaining our dividend track record while funding the growth projects that will take our production to 600,000ozpa," Mr Beament added. "Northern Star will emerge from this process with an enviable balance sheet and having unlocked the value of its assets to provide longer mine lives and increased production and cashflow."
Should you buy Northern Star shares in 2017?
I have said time and again that you wouldn't need to look beyond Northern Star, Newcrest Mining Limited (ASX: NCM) or Evolution Mining Ltd (ASX: EVN) to get a good exposure to gold.
However, while I think the future looks bright for Northern Star, its profit performance is heavily dependent on the price of gold and the Australian dollar. Therefore, it's not a share I'd feel comfortable owning.
I prefer companies with less volatile sales and profits, to avoid losing money when the market takes a turn for the worst.
