Gold miner Northern Star Resources Ltd (ASX: NST) is top of the S&P/ASX 200 (Index: ^AJXO) (ASX: XJO) leaderboard today after if flagged it would lift its gold production rate to 600,000ozpa in calendar year 2018. This compares to previous guidance for production of 525,000-575,000ozpa at A$1,000 – A$1,050/oz for FY 2018.
As a result of the improved forecast Northern Star advanced 4 per cent to $4.67 today, with the miner flagging a tripling of estimated reserves to 3.5 million ounces. Its Jundee and Kalgoorlie operations in WA both expanding their inventory and production capacity estimates.
The majority of Northern Star’s operating costs are incurred in Australian dollars, while it sells its gold in U.S. dollars, which means it is a beneficiary of a stronger U.S. dollar. However, as cash rates rise in the U.S. the gold price may suffer as gold produces no income and may become less attractive to investors who could park their money in cash as an alternative and receive growing risk-free interest payments.
According to The Financial Times the 14 analysts covering Nothern Star have a median share price target of $4.63 on the business, with a high estimate of $5.10.