A Glance At Northern Star Resources Limited And Few Other Gold Mining Stocks

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Australia is considered to be the hub for minerals and mining activities and gold is one of those important minerals found in Australia. There are many gold mining companies listed on ASX and one of the most important company is Northern Star Resources Limited (ASX: NST). The company has produced a return of 33.91% in last one year (as on 3rd October 2019) as compared to S&P/ASX Metals and Mining which has produced returns of 8.02%.

Let’s have a look at what is happening in Northern Star.

About the Company: Northern Star Resources Limited is into the development, mining, exploration and processing of gold deposits and sale of refined gold extracted from Jungdee and Kalgoorlie operations in Western Australia and from the Pogo Operations in Alaska.

Cash Takeover Offer for Echo Resource: Northern Star recommended cash takeover offer of $0.33 per share for all the issued shares of Echo Resources Limited (ASX: EAR). Currently Northern Star has 21.99% interest in Echo Resources Limited.

Important Highlights of the takeover:

Shareholders of Echo would be paid in cash as well as receive certain immediate value for their shares:

  • Shareholders want a smooth flow of funds and looking at the deal, it seems a decent offer for Echo, as it represents a significant premium to Echo’s trading levels before the offer announcement, including:
    • 4% to Echo’s VWAP of A$0.237 on 19 August 2019
    • 1% to the 10-day VWAP of A$0.232 up to and including 19 August 2019
    • 7% to the 20-day VWAP of A$0.220 up to and including 19 August 2019
    • 3% to the 60-day VWAP of A$0.183 up to and including 19 August 2019
  • If Echo shareholders reject the offer, the company might face several funding issues that could hinder its operations;
  • Northern Star is offering an accelerated payment terms to Echo’s shareholders and the terms include payment within seven business days (or by 1 October 2019) of accepting the offer.

Northern Star to Invest $43 million to Expand its Pogo Plant: The company has agreed to invest $43 million to increase the production rate by 30% to 1.3 million tonne per annum. Highlights of the expansion:

  • The US$30 million investment is in addition to Northern Star’s current capital expenditure budgets;
  • Northern Star expects to invest US$10m in the expansion project this financial year, with the remaining US$20m to be invested in FY2021;
  • Annual throughput capacity will be increased from 1 million tonnes to 1.3 million tonnes;
  • Work on the expansion will start this financial year and is expected to be completed in early CY2021.

Production and Cost Guidance for FY20: The company is expecting to produce 800,000 to 900,000oz at AISC $1,200 to $1,300/oz.

Guidance for FY20 Source: Company’s Presentation

Stock Performance: The stock of NST closed at $11.70 on 04 October 2019, up 0.086% from its previous closing price, with a market capitalisation of $7.48 billion. Its 52-week high and low is $14.055 and $7.63, respectively while the total outstanding shares of the stock stood at 639.59 million.

 

Let’s have a look at some other Australian Gold Mining Stocks and their recent activities.

OceanaGold Corporation

About the company: OceanaGold Corporation (ASX: OGC) is a multinational, mid-sized gold mining company which has experience in development and explorations with its assets are located in Philippines, New Zealand and the United States.

OceanaGold Increases Exploration Target: The company has announced that the extensive drilling at the Martha Underground Project supports an increase to the size of the exploration target which will be an addition to the existing resources.

Key Highlights of the Project:

  • Extensional drilling helped in discovering larger areas of mineralisation
  • High-grade intercepts achieved through recent drilling, that include:
  1. 4 metres @ 8.1 g/t Gold, 10.1 g/t Silver on Edward-Martha Veins;
  2. 9 metres @ 13.7 g/t Gold, 32.9 g/t Silver on Empire Vein;
  3. 5 metres @ 17.8 g/t Gold, 65.0 g/t Silver on Empire-Empire HW Veins;
  4. 1 metres* @ 16.5 g/t Gold, 35.0 g/t Silver on Royal Vein;
  5. 5 metres @ 31.7 g/t Gold, 100.7 g/t Silver on Rex Vein;
  6. 9 metres @ 36.1 g/t Gold, 90.5 g/t Silver on Rex Vein;
  7. 3 metres @ 19.2 g/t Gold, 15.1 g/t Silver on Dreadnought Vein;
  8. 1 metres @ 7.6 g/t Gold, 21.2 g/t Silver on Martha-Mary Veins;
  9. 1 metres* @ 5.2 g/t Gold, 64.9 g/t Silver on Welcome Vein.

Source: Company Presentation

Stock Performance: The stock of OGC closed at $3.860 on 04 October 2019, down 3.258% from its previous closing price, with a market capitalisation of $2.48 billion. Its 52-week high and low is $5.280 and $3.260, respectively while the total outstanding shares of the stock stood at 622.28 million. The stock is currently trading at a P/E multiple of 26.020x and has generated a return of -6.18% in the last six-months and -20.08% in the year-to-date basis.

Evolution Mining Limited

About the Company: Evolution Mining Limited (ASX: EVN) is a growth focussed Australian Gold Miner which operates five wholly owned mines and it also holds an economic interest in Ernest Henry copper gold mine which has promised to deliver 100% of future gold and 30% of future copper and silver.

Evolution and Musgrave Enters a JV: Musgrave and Evolution have entered into an $18 million Earn-in and Exploration Joint Venture Agreement over the Lake Austin portion for cue Project in the Murchison District of Western Australia.

Highlights of Joint Venture:

  • If Evolution does not spend the entire $18M within 5 years MGV will retain 100% ownership;
  • Evolution can earn 75% in the Joint Venture area by sole funding $18M over 5 years with a minimum expenditure of $4M to be completed in the first 2 years;
  • Evolution has agreed to subscribe for 18.6M shares in Musgrave at 8.07c per share to raise $1.5M.

Location and geology of the Cue joint venture tenements Source: Company’s Presentation

Stock Performance: The stock of EVN was trading at $4.610 on 04 October 2019, down 0.216% from its previous closing price, with a market capitalisation of $7.86 billion. Its 52-week high and low is $5.585 and $2.630, respectively while the total outstanding shares of the stock stood at 1.7 billion. The stock is currently trading at a P/E multiple of 35.230x and has generated a return of 25.48% in the last six-months and 24.45% in the year-to-date basis.


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