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Northern Star share price on watch after fourth quarter update

The Northern Star Resources Ltd (ASX: NST) share price will be one to watch on Wednesday following the release of its fourth quarter update.

How did Northern Star perform in the fourth quarter?

During the quarter ending 30 June 2020, Northern Star generated underlying free cashflow of $217.9 million from the sale of 262,717 ounces of gold.

This took Northern Star’s total sales for FY 2020 to 900,388 ounces from gold production of 905,177 ounces. This was ~1.6% below the lower end of its FY 2020 guidance, which was withdrawn in March due to uncertainties stemming from the pandemic.

Something else that was withdrawn in March was the payment of its fully franked 7.5 cents per share interim dividend. This payment has now been reinstated and will be made to eligible shareholders on 16 July. After which, the company expects to resume dividend payments in the ordinary course of business.

The company certainly has sufficient liquidity to pay its dividends. At the end of the period its cash, bullion, and investments had risen by 40% over the three months to $769.5 million.

Though, it is worth noting that since the end of the financial year, Northern Star has elected to pay down its corporate bank debt by $200 million. This leaves it with a debt of $500 million.

Costs rise.

The company didn’t provide any details on its all-in sustaining costs for the quarter, but hinted that costs rose because of the pandemic,

Northern Star Executive Chair, Bill Beament, commented: “The health and safety of our people and the communities in which we operate is always our first objective and the measures we adopted in response to COVID-19 reflected that.”

“As we foreshadowed at the time, these measures incurred additional costs, reduced productivities and restricted production,” he added.

Nevertheless, Mr Beament was very pleased with the company’s performance during the quarter.

He said: “To generate quarterly free cashflow of A$217.9 million in these circumstances is an outstanding result which reflects the performance of our staff and business partners, our success in being able to operate continuously throughout the pandemic and the underlying strength of our assets.”

No guidance for FY 2021 was provided with today’s update.

Also on watch today will be the Saracen Mineral Holdings Limited (ASX: SAR) share price after the release of its quarterly update. It delivered record FY 2020 production of 520,414 ounces, ahead of its guidance of 500,000+ ounces.

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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.

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