What's boosting the Northern Star share price on Tuesday?

As gold curls upwards, Northern Star has seen its share price rocket.

| More on:
rising gold share price represented by a green arrow on piles of gold block

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Northern Star confirmed another asset sale today 
  • It will be unloading its Coyota and Paulsens Gold operations to Black Cat Syndicate 
  • In the last 12 months, the Northern Star share price has held gains and is up less than 1% 

Shares in Northern Star Resources Ltd (ASX: NST) are rangebound today and now trade 35 basis points higher at $11.48 apiece.

After surging hard in April, the Northern Star share price has thrust from a low of $10.15 to rest just shy of 52-week highs.

As the price of gold manages to curl upwards, Northern Star has seen its share price rocket north in quite a synchronised fashion.

This relationship has clipped a 30% gain for the Northern Star share price in the past 3 months of trade.

TradingView Chart

What was announced today?

Northern Star posted an announcement from Black Cat Syndicate Ltd (ASX: BC8) that the latter has entered into binding agreements to acquire the company's Coyota and Paulsens Gold operations.

Under the terms, it is proposed Black Cat will pay a cash consideration of $14.5 million at completion, "with a further $15.0 million secured and payable on or by 30 June 2023."

To fund the acquisition, Black Cat is pleased to announce that firm commitments have been received to raise $35 million by way of a placement at an issue price of [55 cents] $0.55 per share to institutional and sophisticated investors.

Shares in Black Cat Syndicate are down 15% today, bringing losses to 23% for the last year.

Bloomberg Intelligence analyst Yi Zhu recently commented that Northern Star's portfolio restructuring efforts could be a net positive, in a research note.

"Northern Star aims for gold production of 2 million ounces by calendar 2026, up 425,000 ounces or 27% from 2021 following asset restructuring over the past 12 months," she wrote.

Noteworthy is the Saracen Minerals transaction of February 2021, which has "estimated to have driven up the company's net present value (NPV) by $1.5-$2.0 billion".

Furthermore, "[t]he divestiture [of its Mungari assets] strengthened Northern Star's balance sheet by A$400 million," adding a question mark over what could eventuate from Black Cat's purchase, announced today.

"Northern Star will likely benefit from higher sustained earnings over the long term, as output is expected to climb 27% from the 1.6 million ounces (moz) reported in fiscal 2021 ended June to a target of 2.0 moz by 2026," Zhu added.

In the last 12 months, the Northern Star share price has held gains and is up less than 1%. This year to date however, it has gained 22% after a 7% gain.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. 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.

More on Share Gainers

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why DroneShield, Healius, Newmont, and Paragon Care shares are pushing higher

These ASX shares are having a strong session on Tuesday. But why?

Read more »

Miner looking at a tablet.
Share Gainers

Guess which ASX lithium stock just surged 94% on a deal with Mineral Resources

Investors are sending the ASX lithium stock rocketing following a joint venture agreement with Mineral Resources.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

It's not too late to buy these 2 rocketing ASX 200 stocks

These dividend shares produce a handy income at the same time as racking up capital gains.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Share Gainers

2 ASX shares with 'promising growth prospects' just starting to creep up now

You need to dump the false logic that stocks that have already moved up are less likely to go further.

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a wild day for ASX 200 shares, with a new record high.

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Share Gainers

Why Calix, Genex, Life360, and Spartan Resources shares are rising

These ASX shares are starting the week on a positive note. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Core Lithium, Life360, Syrah, and Xero shares are jumping today

These ASX shares are ending the week on a high. But why?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Share Gainers

These were the best performing ASX 200 shares in February

These shares were making their shareholders smile last month.

Read more »