Regis Resources Limited & Northern Star Resources Ltd: Why these 2 gold shares are flying higher

Several resource stocks started March on a downer after weak Chinese and Japanese industrial data saw oil prices fall – knocking the breath out of big-name resource stocks such as Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG) and BHP Billiton Limited (ASX: BHP)

Rio Tinto and BHP opened down again today at $75.62 and $29.54 respectively at the time of writing, with Fortescue also down at $4.79.

But while the oil and iron giants bleed, some smaller fry in the gold production sector are flying at 52-week highs.

Regis Resources Limited (ASX: RRL)

Shares in Regis Resources opened up 1.2% today to $4.54 at the time of writing – up 52% from their 52-week low of $2.98, but not quite at the pinnacle of its all-time high of $5.87 in October 2012.

Regis reported a record NPAT of $84.6 million on February 20 for its half-year ended December 31, 2017, up 39% on the previous corresponding period with earnings per share also up 42% to 17.29c per share.

EBITDA was also up 35% from the previous corresponding period at $153.1 million and gold production guidances for FY18 are on track for Regis, with the upper-end of guidance figures expected.

In mid-2017 analysts forecast a 17.9% increase in earnings for Regis in the next 3 years, with the basis for such growth hinged upon Regis managing to outperform the average growth in earnings out of the materials industry in recent times and extremely healthy margins.

Regis shareholders should be happy with the company’s share price trajectory and a fully-franked 8c per share dividend to look forward to on March 21.

Northern Star Resources Ltd (ASX: NST)

Shares in gold production and exploration company Northern Star Resources opened up again today to sit at $6.59 at the time of writing – a 52-week high and 65.5% up from the $3.98 price at this time last year.

Northern Star announced the resignation of company secretary Liza Carpene this fortnight but there is little other news out of the $3.7 billion market cap resource stock, aside from the decision to pay out a 50% increase in interim dividend to 4.5c per share fully-franked.

Northern Star’s half-year results came in pretty strong, with NPAT down 7% from the previous corresponding period due to the wind-down of their flagship project Paulsen’s Gold Mine, but revenue was up 14% to $435.3 million and underlying free cash flow up 9% to $61.1 million.

Northern Star announced on February 20 it would bring forward $25.4 million of exploration and development capital into the second half of FY18 from future years to “capitalise on significant growth opportunities” bringing the growth capital investment for FY18 to $103.4 million.

Investors will watch Northern Star’s balance sheet in the second half as the exploration and development program ramps up, but with no bank debt and a growing reputation for finding and developing gold in Western Australia, things look pretty rosy for the company at present.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. 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 Scott Phillips.

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