Gold has been a standout commodity over the past year with its price rocketing by 33% to more than US$3,300 per ounce.
And gold mining heavyweight Northern Star Resources Ltd (ASX: NST) has been riding the gravy train.
The company's share price jumped by 19% in the last twelve months to reach $18.06 per share at the close of business on Friday.
But could the rally have further to run?
Renowned investment firm Macquarie Group Ltd (ASX: MQG) says the outlook remains bright.
The broker sees further upside for Northern Star shares after the ASX 200 miner revealed a strong set of numbers for FY25.
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FY25 results snapshot
Northern Star sold 1.63 million ounces of gold in FY25, up by 1% from the previous year.
However, revenue of $6.4 billion increased by 30% on the back of a 29% rise in the company's average realised gold price.
In turn, underlying operating earnings (EBITDA) of $3.5 billion ballooned by 60%.
Cash earnings of $2.9 billion also grew by 59% from twelve months prior.
But the headline act was net profit after tax (NPAT) which more than doubled to surpass $1.4 billion.
This robust performance helped the company declare a record fully franked dividend of 55 cents per share.
What else happened?
Northern Star concluded a $300 million share buyback program in FY25 at an average price of $11 per share.
It also wrapped up the acquisition of De Grey mining and its undeveloped Hemi gold project in the Pilbara region of Western Australia.
Moving forward, Northern Star is guiding for between 1.7 million to 1.85 million ounces of gold sales in FY26.
All-in sustaining cost (AISC) is expected to range between $2,300 and $2,700 per ounce for the year.
It is also looking to advance its future gold production profile with up to $2.3 billion in capital expenses allocated for FY26.
These costs include up to $920 million to expand the mill for its KCGM gold mining operation in Western Australia, famous for hosting the world-renowned Kalgoorlie Super Pit.
The company has also set aside between $140 million and $150 million to move Hemi closer to production.
Macquarie's take on Northern Star shares
Macquarie didn't find any major surprises in the group's FY25 results.
Net cash, EBITDA, and NPAT all clocked in slightly softer than anticipated, but Northern Star's dividend beat the broker's estimate by 8%.
The company's operational guidance for FY26 was also in line with expectations.
Here, Macquarie noted that the KCGM expansion remains on track.
However, it cited the timing and cost control of the KCGM mill expansion as important factors for Northern Star shares.
Regulatory approvals and feasibility study updates for Hemi could also influence the share price.
Macquarie's final word
Macquarie retained on outperform rating on Norther Star shares despite reducing its 12-month target price by 4%.
In turn, the broker set a new target price of $24 per share.
This equates to 33% upside potential from $18.06 per share at the end of last week.
