Gold mining giant Northern Star Resources (ASX:NST) has reaffirmed its full-year guidance after posting record cash earnings for the first half of the 2024 financial year.
The company reports that it sold 781,000 ounces of gold at an all-in sustaining cost (AISC) of $1,878 per ounce over the six months to 31 December, driving cash earnings of $702 million — a 50% bump compared to the first half of FY23.
Northern Star’s underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) improved by 41% year-on-year to $889 million. The company says this earnings increase was driven by higher realised gold prices.
The higher sales and earnings translated to a whopping 287% increase in Northern Star’s half-yearly net profit after tax (NPAT) to $211.3 million compared to the $54.6 million in NPAT tabled over the same time the year before.
As a result, Northern Star has declared its highest-ever interim dividend of $0.15 per share, unfranked — up 36% on its FY23 interim dividend.
Alongside the dividend, Northern Star is progressing with a $300 million on-market share buyback program, which was 56% complete as of 31 December.
Northern Star Managing Director Stuart Tonkin attributed the record half-yearly results to ‘consistent operational delivery’, touting the ‘simplicity and scale’ of the company.
“This interim result is a glimpse of the cash-generating potential that our business is positioned for on a sustainable basis as we reach the halfway mark of our low-risk, 5-year profitable growth strategy.
In addition to record half-year cash earnings of $702 million, +50% higher period-on-period, Northern Star also posted half-year underlying free cash flow of $131 million, notwithstanding significant growth capital investment.”
Tonkin says the highlight of the half-year was the performance of the company’s Kalgoorlie Production Centre, which accounted for more than half of Northern Star’s EBITDA, with record EBITDA margins of 44%.
However, he says cost pressures remain prevalent across the gold industry, driven by higher gold royalties and fuel costs and a weaker Australian dollar than in previous years.
Nevertheless, the results have seen Northern Star maintain its sales, costs, and spending guidance, which it says remain second-half weighted.
Over FY24, Northern Star expects to produce between 1.6 million and 1.75 million ounces of gold and AISC of between $1,730 and $1,790. As far as growth expenditure goes, the company is forecasting full-year spending of between $1.15 billion and $1.25 billion.
Moody’s Investor Services analyst Mariano Ferreyra says the record Northern Star results are in line with analyst expectations.
“NST’s current organic growth plans will require significant capital spending and will limit free cash flow generation in the near term. However, the company’s strong liquidity position and operating cash flows will comfortably fund its capital expenditure program under our gold price sensitivities.
We expect NST will continue to maintain a strong financial and liquidity profile throughout its current growth phase, operating comfortably within its publicly stated financial policy targets and our rating thresholds.”
Nevertheless, despite the results, Northern Star shares have taken a slight dip. Whether it’s simple profit-taking or whether investors were expecting more, shares in Northern Star are trading 1.33% lower at $13 as of 2:30pm AEDT.
Images: Northern Star Resources
