Gold miner Northern Star Resources (ASX:NST) has just released its December quarter activities report to the market.
Northern Star produced 145,253oz, following the course of their FY16 guidance of 535,000-570,000 ounces per annum. All-in sustaining costs (a measure of cost per ounce that takes into account other mitigating expenses, rather than just the cost of mining per unit), for the quarter were A$1,040/oz. This was below the bottom end of its A$1,050-1,100/oz guidance range for FY16.
The quantity of gold sold was 142,017oz, being at an average price of A$1,484/oz. Moreover, the strong operational performance during the December quarter coincided with Northern Star concluding the quarter with A$226 million in cash, bullion, along with investments. This was a A$30 million increase, when compared to the end of the September quarter, despite Northern Star paying out A$18 million in dividends, along with spending A$23.5 million on exploration and development. Exploration and development spending aims to increase production to 700,000oz by FY18 as part of an ‘Organic Growth Strategy’.
As of the December quarter, Northern Star has no bank debt. Northern Star Managing Director Bill Beament commented positively on the December quarter results: “We produced gold at the rate of 580,000ozpa in the December quarter. We did this at an AISC (All-in Sustaining Cost) of A$1,040/oz, compared with the current gold price of A$1,550/oz. This has enabled us to continue growing our cash balance, while also paying dividends and investing in an organic growth strategy that will see us increase production to 700,000ozpa without losing our debt-free status.”
Investors have reacted very sharply to Northern Star’s announcement, with NST shares up almost 6%, as at 10.54am, to approximately $2.67. Despite the gradual decline of the gold price in 2015, Northern Star has been performing above expectations, gaining over 46% in the last year.
Author: Simon Herrmann
Jan 14, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.