Northern Star profit up by 570%

Gold producer Northern Star Resources is calling the past six months a defining period for the company, with a combination of strong growth in production, lower costs and increased free cash flow.

Northern Star achieved a 573 per cent increase in profit to $51.1 million for the six months to December, with revenue rising by 471 per cent to $412 million.

That’s despite incurring acquisition and restructuring costs of $11.3 million for the period.

The result stemmed from the sale of 292,840 ounces of gold at a cost of $1,057/oz, and incorporates the company’s Jundee, Plutonic, Kundana and Kanowna Belle gold mines.

“The strong result enabled Northern Star to double its fully-franked interim dividend to 2 cents per share,” the company said in a statement.

“During the period, the company reduced its bank debt from $70 million to just $35 million. Subsequent to the half-year end, the facility has been further reduced to $20 million.’’

The company expects to retire the facility early in the June quarter.

Managing director Bill Beament said the growth in production and free cash flow showed the company had achieved a key goal of becoming a major Australian gold miner.

“The increased dividend and rise in the company’s return on equity from 7 per cent to 17.6 per cent half-on-half are the most important measures of Northern Star’s achievements,” he said.

Northern Star plans to maintain production at an annual rate of 550,000-600,000oz per annum, at an ASIC of $1,050-$1,100/oz, and has budgeted $50 million to be spent on exploration for 2015.

The company’s shares were relatively unchanged at $2.05 per share at the close of trade.