Northern Star’s profit soars on acquisitions

Northern Star Resources has lifted its first-half profit by a massive 573 per cent to $51 million, reflecting the bedding down of a spate of acquisitions last year.

The acquisition of the Jundee, Plutonic, Kundana and Kanowna Belle mines enabled the company to lift first-half gold sales to 292,840 ounces, up from 50,927 ounces in the previous corresponding period.

That resulted in a 471 per cent increase in revenue to $412 million.

The company received an average price of $1,407 an ounce and all-in sustaining costs were $1,057 an ounce, inclusive of a $49 an ounce non-cash rehabilitation expense.

Northern Star declared a fully franked interim dividend of two cents a share, up from one cent in the previous corresponding period. The dividend will be paid on Friday, April 3.

“The doubling of the dividend reflects Northern Star’s surging cash flow and robust balance sheet,” the company said in a statement.

The gold miner boosted its cash reserves from $49.2 million at the end of 2013 to $119.1 million at the end of last year and has reduced debt to $20 million.

Managing director Bill Beament said the growth in production and free cashflow was extremely impressive because it showed the company had achieved a key goal of becoming a major Australian gold miner with scale and asset diversity.

“The sharp increase in return on equity from 7 per cent to 17.6 per cent, along with the rise in earnings per share from 1.8 cents to 8.7 cents and the 100 per cent increase in the interim dividend demonstrates that we haven’t generated growth for the sake of it,” he said.

“Instead, we have pursued growth purely as a means of delivering increased returns to shareholders.”

Northern Star said it aimed to maintain production at an annual rate of 550,000-600,000 ounces a year at all-in sustaining costs of $1050- $1100 an ounce, as well as continue its aggressive exploration program to increase resources and reserves across its mines and increase mine lives.

Shares in the company were off one cent to $2.05 at 8.30am.