Northern Star Resources Ltd (ASX:NST) have released upbeat financial results for the half year ending 31st December 2015. Assisted by a higher gold price, the gold miner reported rise in revenue, profits, and EBITDA for the period.
79% NPAT Growth
Northern Star’s revenue for the period increased 3% to the PCP, to A$425million. Coinciding with a 79% surge in NPAT, to A$65million.
This result was achieved at an average gold price of A$1,497oz, equating to 6% rise to the PCP. AISC (All-in sustaining costs) were at A$1,062oz, being at the lower end of the gold miner’s guidance.
EBITDA grew 22% for the period, to A$182.3million.
Operating cash flow grew 35% for the period, to $173.4million. Managing Director Bill Beament attributes this growing figure to the “Increasingly favourable cost environment stemming from the resources downturn”.
Mr Beament further commented; “Given our forecast growth in production, combined with today’s gold price and our current costs, Northern Star could be well on the way to generating A$450million a year in operating cash-flow.”
‘Organic Growth Strategy’
Gold production for the period was 285,493oz. Coinciding with a 3% reduction in Gold sales, to 283,573oz. The Jundee, Kundana (In which NST have a 51% interest), along with the Kanowna Belle mines were the major contributors, with over 73% of Gold production coming from the three mines.
According to Mr Beament, Northern Star is in line with their ‘Organic Growth Strategy’, in which the gold miners aim to lift production to 700,000ozpa in FY18: “These results demonstrate the cash generating capacity of Northern Star based on our current production rate of 570,000 ounces a year. But more importantly, they highlight the free cash-flow Northern Star is set to generate as production grows to 700,000oz a year over the next two years.”
Additionally, the company has a 25% interest in the 2.7million ounce Central Tanami Project, in which their interest will eventually increase to 60%. This is expected to be achieved by 2017.
50% Dividend Growth
The board of Northern Star have declared a fully franked interim dividend of 3cents per share. This is a 50% increase to the prior dividend.
NST 5% up Upon Open
As at 10.09am (AEDT), NST has rose over 5%, to $3.92. With an increase in global market uncertainty, resulting in an increased gold save haven demand, NST has risen over 40% in 2016, exceeding the 25% return major competitor Newcrest (ASX:NCM) has given.
Author: Ben Khouri
Feb 19, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.