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Northern Star Resources share price sinks 6% lower on results and acquisition news

The Northern Star Resources Ltd (ASX: NST) share price has tumbled lower this morning following the announcement of its full year results and an acquisition.

At the time of writing the gold producer’s shares are down 6% to $11.68.

What happened in FY 2019?

In FY 2019 Northern Star posted an underlying net profit after tax of $179.2 million, which was a 15.2% decline on the prior corresponding period. Statutory net profit after tax came in at $154.7 million, which was down 20% on FY 2018’s result.

Management advised that this result partly reflects the $50 million investment it made in the Pogo operation to develop new mining areas and a new mining fleet.

Operating mine cash flow in FY 2019 was 21% higher year on year at $587.6 million. This resulted in the company finishing the period with $361.4 million in cash, bullion, and investments.

Which allowed Northern Star to declare a final fully franked dividend of 7.5 cents per share, bringing its full year dividend to 13.5 cents per share. This was in line with its policy of paying out 6% of revenue to shareholders.


In addition to announcing its full year results, Northern Star announced its intention to acquire Echo Resources Limited (ASX: EAR). It has tabled a 33 cents per share offer, which values the gold miner at ~$240 million.

After careful consideration, the Echo board has unanimously confirmed their intention to accept the offer in the absence of a superior proposal.

Management explained the rationale for the acquisition: “The acquisition of Echo will allow Northern Star to consolidate the mineralisation at the Yandal Gold Project for further evaluation on both an exploration and development basis. The acquisition of Echo will also provide Northern Star with the ability to process gold at the Bronzewing processing plant, if an evaluation of a restart is successful.”

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Motley Fool contributor James Mickleboro 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.