Northern Star share price dulls despite record $702 million cash earnings

The Northern Star Resources Ltd (ASX: NST) share price is ending the day slightly lower after polishing up its latest half-year result.

Shares in the gold miner finished Thursday 0.8% lower at $13.06. Still, it could have been worse, given the share price reached a 3.6% intraday low of $12.70 before retracing.

Golden result fails to excite the Northern Star share price

• Revenue up 15% to A$2,248 million
• Gold sales relatively flat at 780,785 ounces versus 773,243 in the prior first half
• Underlying EBITDA up 41% to A$889 million
• Cash earnings up 50% to a record A$702 million
• Record interim unfranked dividend of 15 cents per share, up 36%

What happened in the first half?

Australia’s biggest gold miner by market capitalisation generated a 50% increase in cash earnings in the half year ended 31 December 2023. The sizeable strengthening of profits is attributable to a 14% jump in the average realised gold price between reporting periods — rising from $2,513 per ounce to $2,873 per ounce.

The price of gold has held steady around record levels for months now. Currently hovering around A$3,100 an ounce, people are still flocking to the precious metal amid uncertain monetary policy and geopolitical tensions.

On 21 November last year, Northern Star provided an exploration update. As per the update, drilling more than 130,000 metres yielded discoveries across the company’s various projects, extending “organic growth optionality across all three production centres”.

The Northern Star share price has trended higher since this update, lifting 9%, as shown below.

What did management say?

Commenting on the result, Northern Star managing director Stuart Tonkin said:

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, five-year profitable growth strategy.

The highlight of our strong half was the performance of the Kalgoorlie Production Centre, which contributed more than half of the Group’s EBITDA and record EBITDA margins of 44% as our largest asset – KCGM – began a new era of mining high-grade Golden Pike North material.

What about FY24 guidance?

The company reiterated its previously set guidance for FY2024. Notably, this includes an expected skew towards the second half being stronger. Gold sales are slated to total somewhere between 1.6 million to 1.7 million ounces.

Elsewhere, Northern Star pencilled its expectations on the cost and investments side for FY24 — a ‘key focus’ for the company as cost pressures persist. The following guidance was given:

• All-in sustaining costs between $1,730 to $1,790 per ounce
• Growth capital expenditure between $1.15 billion to $1.25 billion
• Exploration expenses of $150 million

Northern Star share price snapshot

The glimmer of gold has helped the Northern Star share price outperform the S&P/ASX 200 Index (ASX: XJO) by 18% over the last year.

While the capital growth beats the benchmark, how does it stack up on an income basis? Considering today’s declared dividend, Northern Star offers a yield of 2.3% compared to the top 200’s 3.8% passive flow.

The post Northern Star share price dulls despite record $702 million cash earnings appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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