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Highlights
- Northern Star Resources (ASX:NST) shares fall after reporting a quarterly performance below expectations.
- A miss in production and higher costs contributed to the 0.2% drop in share price.
- Rival company, De Grey Mining (ASX:DEG), sees a small share price increase amid its buyout by Northern Star.
Shares of Northern Star Resources (ASX:NST), one of the leading gold producers, saw a slight dip of 0.2% in the wake of their quarterly performance update. At $16.96, the shares are responding to the company’s announcement regarding its December quarter results, which, although showing improvements compared to the previous period, still fell short of analysts’ expectations.
Despite a positive performance in the overall materials sector, which gained 1.32%, and a broader rise of 1.2% in the ASX 200, Northern Star’s production results came in lower than expected. The company reported a production and sales total of 410,000 ounces of gold for the quarter, missing the consensus estimate by approximately 20,000 ounces. The discrepancy was largely attributed to the performance at the Kalgoorlie mine, one of Northern Star’s key assets.
Additionally, the company saw group costs increase by 6%, a factor that contributed to the muted response from the market. Citi analysts suggested that this underperformance might lead to a modest EBITDA consensus downgrade for the first half of FY25. This forecast reflects an anticipated reaction to the results, which analysts expect to be relatively flat or slightly negative for Northern Star in the short term.
In contrast, De Grey Mining (ASX:DEG), a smaller rival that Northern Star is in the process of acquiring, saw its share price rise by 0.9%, reaching $1.98. This increase comes despite the less-than-optimal result from Northern Star, signaling some positive sentiment towards the ongoing buyout process.
Citi analysts, who retained their “neutral” rating on Northern Star, noted the potential for a less favorable outlook for the gold producer’s short-term earnings, stressing that the market could remain cautious. As the company navigates these challenges, the attention will likely shift towards how it manages production expectations and costs in future quarters, especially with the integration of De Grey Mining on the horizon.
Northern Star Resources faces some short-term difficulties, including disappointing production results and rising costs, the broader sector remains strong, and its strategic acquisition of De Grey Mining continues to generate interest within the market. How the company adapts to these challenges in the coming months will be key for investor sentiment moving forward.
