Reporting Season

Northern Star tops analyst profit forecasts, expects a stronger second-half

Thu 10 Feb 22, 10:32am (AEST)
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Key Points

  • Northern Star's first full reporting period since its Saracen merger in Feb 2021
  • Gold production is expected to be skewed towards the second half
  • Full-year FY22 guidance reaffirmed, costs to decrease towards year-end

It’s business as usual for the growth-oriented Northern Star Resources (ASX: NST), even though its share price is trading at almost 2-year lows.

The gold miner reported a 43% rise in net profits in the first-half of FY22 to $261m, underpinned by higher production and portfolio optimisation. 

The profit result came in well-above Bell Potter estimates of $176.2m and consensus forecasts of $209.5m. 

Northern Star earnings at a glance:

  • Revenue of $1.8bn, up 63% 

  • Gold sales of 779,000 oz, up 62%

  • Average gold price realised of $2,388, flat compared to last year

  • All-in sustaining cost (AISC) of $1,613/oz, up 2% 

  • Interim dividend of 10 cents per share, up 5% 

“We remain on track to meet our FY22 production guidance, which incorporates current WA border restrictions and the associated labour and cost impacts,” said Managing Director Stuart Tonkin.

The reaffirmed guidance includes full-year FY22 gold production between 1,550 - 1,659koz at an all-in cost between $1,475 - $1,575/oz. Gold production is weighted towards the second-half of FY22, driven by increasing grades and mining rates.

Northern Star said it expects all-in costs to progressively decrease throughout the year.  

“The Board declared a fully franked interim dividend of 10 cents per share, a return to shareholders of 27% of cash earnings. This return is consistent with our capital management framework while having regard to the need of maintaining a strong balance sheet and the ability to pursue value-adding investment opportunities,” added Tonkin. 

Northern Star shares will go ex-dividend on Monday, 7 March.

Outlook for gold prices

After reaching all-time highs of US$2,075 in August 2020, gold has mostly been moving sideways around the US$1,800 level.

The frustrating sideways action has muted any upside potential for gold miners.

"Geopolitical risks will continue to provide some support for gold as an immediate de-escalation with the Ukraine situation seems unlikely and so does a revival of the Iran nuclear deal," said Oanda senior market analyst Ed Moya.

"The gold market is divided on what will be the next move and that should be good news for patient bulls. Aggressive easing still seems the least less likely path for the Fed and if some of the more hawkish expectations come down, gold continue to rise."

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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