This morning gold miner Northern Star Resources Ltd (ASX: NST) handed in its quarterly and full year production update for the period ending June 30, 2019. Below is a summary of the results with comparisons to relevant corresponding periods.
- Quarterly group gold sales of 232,042 at an all in sustaining cost (AISC) of A$1,238/oz (US$866/oz)
- Full year group sales of 840,508/oz of gold at an AISC of A$1,296/oz (US$907/oz)
- Australian operations sold a record 639,243oz at AISC of A$1,167/oz (US$817/oz)
- Pogo (Alaskan gold mine) sold sold 48,009oz at an AISC of US$1,207/oz
- Pogo saw June quarter production lift 33%, with costs down 18%
- Invested ~A$34m in growth capital and exploration over the year
- Record underlying free cash flow of $104 million over the year
- Paid $38m in dividends over the year
- No debt and cash on hand up $73m to $361m over the year
These are some impressive numbers and the Northern Star share price is up 85% over the past year thanks to a spot gold price that has risen above US$1,300 an ounce since the end of May 2019 and above US$1,400 (A$2,028) an ounce since June 2019 on the back of increasing expectations the US Fed is set to cut benchmark cash rates.
Northern Star produces the majority of its gold at its WA-based Kalgoorlie and Jundee mines which means it wears production costs in Australian dollars, before selling its gold in US dollars. So its profit margins are ballooning now the AUD gold price is sitting around A$2,029/oz and its Australian operations AISC is A$1,167/oz.
Recently gold miner Regis Resources Ltd (ASX: RRL) revealed a local AISC around A$1,030/oz to mean it's close to making a A$1,000 profit per ounce of gold produced.
No wonder shares in Regis, Northern Star, Newcrest Mining and St Barbara Ltd (ASX: SBM) have gone gangbusters over the past 24 months.
The only problem is the gold price moves in mysterious ways, with a weaker US dollar and lower risk free rates supporting it on the one hand, but a risk-on approach in capital markets today working against it on the other hand.
As such it's tough to know which direction Aussie gold mining shares will take over the medium term.
