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Here’s why the Northern Star (ASX:NST) share price is climbing today

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The Northern Star Resources Ltd (ASX: NST) share price opened more than 4% higher this morning following release of the company’s half-year results. At the time of writing, the Northern Star share price is trading up $3.95% at $12.37.

Northern Star Resources is a gold production and exploration company with a resource base located in Australia and North America’s gold regions.

Record profits and interim dividend boost Northern Star share price

The company reported that it achieved record profits, cash flow, and interim dividend in the 6 months leading to 31 December 2020.

Northern Star’s net profit after tax shot up 46% compared to the previous corresponding period (pcp) hitting $184.5 million.

The interim dividend soared 27% to 9.5 cents a share, fully franked.

The gold miner’s group earnings before interest, tax, depreciation and amortisation (EBITDA) also posted record gains to reach $472.2 million. That’s a 47% leap compared to the previous corresponding period.

Commenting on Northern Star’s EBITDA, executive chair Bill Beament said:

The record EBITDA of A$472m demonstrates that our growth plan is delivering superior results.

This result came despite investing A$108m in exploration and expansionary capital and directing 39 per cent of our gold sales into hedges, which meant revenue was over A$100m lower than at spot prices.

The company further posted an underlying free cash flow in the first half of FY21 of $226 million, a significant increase from the pcp, which was $116 million.

Northern Star merger with Saracen positioned to boost production

On 12 February 2021, the Northern Star merger with Saracen Mineral Holdings Limited (ASX: SAR) will be implemented. 

Regarding its first-half results, Northern Star reported that sales stemmed from 480,431oz of gold production.

The company is expecting a stronger second half following the merger with Saracen. Production guidance for the full year is 940,000oz to 1.06 million oz.

Northern Star believes that the Saracen merger positions the company on a “clear pathway to an annual production rate of 2 million oz”.

The Northern Star share price has dropped more than 10% over the past 12-month period.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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