Northern Star Resources’ (ASX:NST) net profit soars 300% in FY21

Highlights

  • Following the successful merger with Saracen Mineral Holdings, Northern Star is now the world’s sixth-largest gold mining company.
  • The company reported an excellent performance in FY21, on the back of record production and a firm Australian dollar.
  • Net profit after tax surged by 300% during the period.
  • NST has announced a fully franked final dividend of 9.5 cents per share.

Australia-based gold producing company, Northern Star Resources Limited (ASX:NST) has delivered a strong performance in the financial year 2021 ended 30 June 2021, on the back of record production.

Also, the company reported a massive increase of 300% in its net profit after tax to AU$1.032 billion for the period.

Source: Copyright © 2021 Kalkine Media

As a result of its merger with Saracen Mineral Holdings, NST is now the world's sixth-largest gold mining company. The gold space player currently holds various projects in Australia’s Kalgoorlie and Western Australian regions. Moreover, it operates the Pogo project in Alaska, United States.

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Let’s skim through major highlights for the 12-month period.

Record production volumes, strong financials

The company has beaten its FY21 guidance on the back of record production and earnings after the successful merger with Saracen. The FY21 results, which include Saracen Minerals from 12 February, demonstrate a robust outlook for profitable production growth.

Related read: Who is the largest gold producer in Australia?

FY21 highlights:

  • Revenue grew by 40% from the previous corresponding period.
  • NST registered cash earnings of AU$648 million, up 10% year-on-year.
  • Underlying net profit after tax increased by 28% to AU$372 million.
  • Underlying EBITDA was AU$1,159 million, nearly 47% up relative to the FY20 figure of AU$791 million.
  • Operating cash flow grew 52% to AU$1,077 million.

  • The miner sold 1.6Moz gold during the period at an average gold price of AU$2,277 per ounce.
  • AISC for the financial year stood at AU$1,483 per ounce.
  • Both production and AISC remained under the guidance range.
  • The company has milled 25.5 million tonnes of ore at an average head grade of 2.2gpt for 1.6Moz of gold recovered.
  • The gold miner has also upgraded its group resource and reserves by 15% and 8%, respectively during the financial year.

Related read: Top ten fully franked gold stocks with high dividend yield

Full-Year dividend up 11%

NST introduced a new dividend policy during the financial year that targets a total annual dividend payment of 20-30% of cash earnings.

                 

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Additionally, the company has announced a fully franked final dividend of 9.5 cents per share. This brings the full-year dividend to 19 cents per share, up 11% year-on-year.

FY22 Guidance

Production guidance for FY22 has been set at 1.55Moz – 1.65Moz at an AISC of AU$1,475 - AU$1,575/oz.

Bottom Line

Strong cash earnings in FY21, backed by record production volumes and a steady Australian-dollar gold price, reflect the strength of NST’s underlying business. The company has cash and bullion of AU$799 million, as at 30 June 2021.

With a clear five-year pathway to annual production of 2Moz a year by FY26, the company remains committed to generating strong returns.   

NST shares were trading at AU$9.7 per share midday on 25 August 2021, down 0.62% from its last close.

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