Why the Northern Star (ASX:NST) share price is surging 7% today

Investors are reacting positively to the company’s performance update.

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Key Points

  • Northern Star shares up 6.86% to $9.35
  • Strong performance by Kalgoorlie and Yandal, but operations at Pogo lagging behind
  • On track to meet guidance for FY22

The Northern Star Resources Ltd (ASX: NST) share price is up and away on Thursday. This comes after the company released the results for its second quarter of FY22.

At the time of writing, the Australian gold miner’s shares are up 6.86% to $9.35.

Let’s take a look to see how Northern Star performed over the 3-month period.

What’s did Northern Star report?

The Northern Star share price is on the move in early morning trade following the company’s latest performance report.

For the quarter ending 31 December, Northern Star revealed a modest result whilst managing COVID-19 impacts.

Gold sold during the three months totalled 392,655 ounces at an all-in sustaining cost (AISC) of $1,631 per ounce.

Northern Star noted that Kalgoorlie and Yandal continue to perform in line with expectations. On the other hand, Pogo delivered below expectations but is well-positioned to increase mining rates in the second-half of FY22.

Despite the small hiccup, the company advised it is on track to meet its FY22 guidance of 1.55 million ounces to 1.65 million ounces. AISC is also expected to be in the range of $1,475 to $1,575 per ounce.

Net mine cash flow for the quarter came to $175 million. This is due to the company investing $150 million in growth capital and $28 million in exploration activities.

Northern Star declared a healthy balance sheet with $774 million in liquidity, excluding $700 million in undrawn available facilities. Cash and bullion stood at $588 million, along with $300 million in corporate bank debt.

The company’s hedge book (total outstanding contracts and transactions) is at 1.13 million ounces at an AISC of $2,405 per ounce.

Management commentary

Northern Star managing director, Stuart Tonkin touched on the company’s performance, saying:

During the quarter we safely advanced our growth strategy towards becoming a 2Mozpa producer and entered into a convertible funding agreement with Osisko Mining that we believe has the potential to deliver significant value for shareholders.

We remain on track to meet our FY22 guidance, which incorporates the current WA border closure and associated labour and cost impacts. Our experience at Pogo in Alaska has provided examples of the disruption we may face in WA and the mitigating actions required to reduce operational impact.

About the Northern Star share price

Over the last 12 months, Northern Star shares have failed to take off, dropping more than 30%. In 2022 alone, the company’s shares are relatively flat.

Based on valuation grounds, Northern Star is ASX’s 50th largest company with a market capitalisation of approximately $10.82 billion.

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Motley Fool contributor Aaron Teboneras owns Northern Star Resources Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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