Northern Star pursuing acquisitions

Northern Star Resources has weathered a fluctuating gold market with low costs and strong profits, and is looking forward to new acquisition opportunities, chairman Chris Rowe announced at its annual general meeting today.

“It is no secret that we have been on the lookout for suitable acquisitions for some time," Mr Rowe said.

“We are in an ideal position to make an acquisition thanks to the combination of our strong balance sheet, ongoing cash flow and excellent management.”

Northern Star achieved a revenue of $144.2 million for FY2013, up 45 per cent on the previous year, and reported a profit rise of 30 per cent to $28.3 million, despite a drop in value of its tenements and other assets.

“It is important to note that as well as benefiting from strong gold prices earlier this year, this result reflects a further 5 per cent fall in cash costs,” Mr Rowe said.

“Our all-in sustaining cost was $1,016 an ounce for the year and fell again in September to just $996 an ounce.

“As you would be well aware, there are very few Australian gold miners with all-sustaining costs below $1,000 an ounce. The fact that our company has achieved this outstanding result from underground mining in the backyard of WA, a state which has been notorious for rising costs in recent times, is testimony to the remarkable efforts of our executives and their teams.”

Northern Star paid a fully-franked dividend for the past financial year of 3.5 cents per share.

“This represents an attractive fully-franked dividend yield of five per cent based on a share price of 71 cents and makes our company one of the very few Australian Securities Exchange-listed gold miners which pays a dividend,” Mr Rowe said.

Mr Rowe said that while the board was mindful of investors’ desire for dividends, it was focused on underlying capital growth.

“It is important to note that any investment we make in growing the business is determined by shareholder returns, not for growth’s sake,’’ he said.

“Our timing also appears to be fortuitous. There is no shortage of gold assets in our backyard which we could acquire via one means or another. But we make no apology for the fact that our hurdle rates are very demanding.

“However please note that I said demanding, not prohibitive. Your board is seeking an acquisition opportunity which strikes the right balance between meeting acceptable rates of risk and return on one hand while offering an attractive growth profile on the other.”

The company has forecast a total production of 100,000-115,000 ounces of gold in FY2014, with all-in sustaining costs of $900-$1,050 per ounce, as well as a capital expenditure of $28 million - predominantly ‘sustaining capital’.

Shares in Northern Star are trading steady at 71 cents per share, as of 2.00pm, WST.