The Northern Star Resources Ltd (ASX: NST) share price is heading south on Monday.
This comes after the company released its FY2022 full-year results.
At market open, the gold miner's shares dumped nearly 3%, but have since recovered some of those losses. However, the downturn is in line with a broader slump across the ASX today.
Currently, Northern Star shares are down 1.45% to $7.47.
Northern Star share price retraces despite 'strong performance'
- Annualised gold sold of 1,561koz at AISC of $1,633/oz, in line with guidance
- Total revenue up 35% to $3,735 million
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 31% to $1,517 million
- Underlying net profit after tax (NPAT) down 27% to $273 million
- Final dividend down 43% to 11.5 cents per share, fully-franked
- Strong balance sheet with cash and bullion of $628 million as at 30 June
What happened in FY2022?
For the 12 months ended 30 June, Northern Star achieved gold production of 1,561koz at an all-in sustaining cost (AISC) of $1,633/oz.
Despite a challenging environment, this was in line with its guidance of 1,550koz to 1,650koz at an AISC of $1,600/oz to 1,640/oz.
The performance of the Western Australian production centres of Kalgoorlie and Yandal delivered FY2022 production and cost guidance. Production performance at the Pogo Operation substantially improved, with a milestone run rate of 250koz per annum achieved in the second half.
As a result of the strong production and gold price realised, the company generated record underlying EBITDA of $1.5 billion. This was underpinned by a 29% increase in gold sold and a 7% increase in the average realised gold price.
Similarly, operating cash flow was up 49% from the prior year to a record $1.6 billion. This compared to $1.1 billion in FY2021.
At 30 June, cash and bullion totalled $628 million. The company had drawn corporate bank debt totalling $100 million and has no scheduled repayments in the next 12 months.
The board declared a fully-franked final dividend of 11.5 cents per share, corresponding to 23% of cash earnings. This brings the full-year dividend to 21.5 cents per share, representing a 13% improvement over the prior comparable year.
In addition, Northern Star elected to return funds to shareholders via an on-market share buyback of up to $300 million.
What did management say?
Commenting on the results, Northern Star managing director Stuart Tonkin said:
These results, which include for the first time Saracen and 100% of the Super Pit, clearly demonstrate Northern Star's cash earnings potential. Our strong performance in FY22 generated $1 billion in cash earnings, which underscores the sustainability of the cash flow from our high-quality assets located in tier-1 jurisdictions.
The fully franked final dividend of 11.5cps, within our dividend policy target and payable next month, will mean we have returned $1 billion cash to shareholders since FY12.
The announcement today of the first buy-back in Northern Star's history presents compelling value and confirms the Board's confidence in our strong balance sheet and cash generation outlook and aligns with our fiscal discipline and returns focus.
What's the outlook?
Looking ahead, Northern Star provided the following guidance for FY2023:
- Gold sales between 1,560 and 1,680 ounces, weighted towards the second half due to the scheduled ramp-up of the Thunderbox mill expansion and Pogo stoping schedule
- AISC in the range of $1,630 to $1,690 per ounce (based on assumed average exchange rate of AUD: USD 0.70)
- Growth capital expenditure similar to FY2022 levels with $650 million forecasted (including $13 million corporate investment)
- Exploration expenditure of $125 million
Tonkin touched on Northern Star's outlook:
We have made a solid start to FY23 and continue to progress the KCGM cutback with our new cost-efficient mining equipment. The SKO processing plant is now on care and maintenance, at Thunderbox we commence commissioning the expanded mill in Q1, while at Pogo we have removed surplus equipment, reflecting increased development rates across the fleet.
The Northern Star share price is 20% in 2022 after recording heavy falls from April onwards.
