Financial Markets - Investor Desk

Investment Thesis

Leveraged to changes in the USD.
Solid assets with reserve/resource.
New acquisitions provide upside (resource and operational improvement).
Strong management team with significant mining expertise.
Strong balance sheet
Company has a good track record on shareholder return

Key Risks

Deterioration in global gold supply & demand equation.
Deterioration in gold prices.
Production issues, delay or unscheduled mine shutdown.
Adverse movements in AUD/USD

FY21 Results Highlights

Solid first half results with gold sales coming in at the top end of Company’s guidance and management noting that they remain on track to meet full year guidance. Relative to the pcp, revenue was up +34% to $1.1bn, with average gold price realized up +17% (AUD terms) and gold sold (ounces) up +21% over the period. Operating earnings (EBITDA) were up +47% to $472.2m and underlying NPAT of $194.4m was up +63%.

Company declared an interim dividend of 9.5cps (fully franked), which was in line with payout policy of 6% of revenue.
Underlying free cash flow was strong, up +94% to $225.7m.
Strong balance sheet, with $672m in liquidity available, consisting of cash, bullion and investments of $372m and $300m in undrawn facilities.
NST currently has approx. 10% of annualised production hedged over the next 3 years (350kozs at $2,128/oz). NST has been focusing on reducing its hedge book so that it can potentially participate in higher gold prices.
FY21 guidance was unchanged on what was provided at the FY20 results

Company Description

Northern Star Resources Limited (Northern Star) is a gold production and exploration company with a Mineral Resource base of 10.2 million ounces and Ore Reserves of 3.5 million ounces, located in highly prospective regions of Western Australia and the Northern Territory. NST is the third largest gold producer in Australia. The Company also recently acquired a gold mine in Alaska.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.