Northern Star shines amid gold price spike

Buoyant gold prices have delivered record earnings for Super Pit owner Northern Star Resources despite mounting cost pressures bumping up the miner’s production costs.

The Stuart Tonkin-led goldminer's half-yearly report on Thursday revealed a 15 per cent bump in revenue to $2.25 billion, enabling it to provide shareholders with a record 15-cents-per-share dividend.

About $198.5 million in post-tax profit was collected, a 316 per cent boost from this time last year.

Northern Star’s glowing results were largely attributable to the booming gold price, which has remained above $3,000 a tonne this year.

While toasting the result, the miner noted higher gold royalties, fuel costs and a weaker Australian dollar did eat into profits.

Northern Star’s cost of production rose 6 per cent to $1,878 an ounce, about $100 above full-year guidance.

Cash operating costs rose about $100/oz to $1,588.

But that was more than offset by the price Northern Star sold its product for, which rose 14 per cent to an average of $2,873/oz.

Mr Tonkin said the simplicity of the miner – which focuses solely on gold – was a factor in the record result.

“This interim result is a glimpse of the cash-generating potential that our business is positioned for on a sustainable basis as we reach the halfway mark of our low-risk, five-year profitable growth strategy,” he said.

“The highlight of our strong half was the performance of the Kalgoorlie Production Centre, which contributed more than half of the group’s EBITDA and record EBITDA margins of 44 per cent as our largest asset – KCGM – began a new era of mining high-grade Golden Pike North material.

“Cost pressures remain prevalent across our industry – including higher gold royalties and fuel costs and a weaker Australian dollar – and continue to be a key focus for our teams as we work towards delivering our FY24 guidance.”

Analysts were largely impressed with Northern Star's performance, with Barrenjoey describing the miner as "the only one of the large-cap gold corporates currently delivering to expectations".

Northern Star owns the KCGM Super Pit in Kalgoorlie, Yandal operations also in the Goldfields, and Pogo goldmine in Alaska.

The Super Pit is expected to churn out up to 900,000t of Northern Star’s anticipated gold guidance of between 1.6 million tonnes and 1.7mt this financial year.

Northern Star has begun upgrades to its Fimiston Mill, which will enable the miner to double KCGM’s output to 27mpta by 2029.

The journalist owns shares in Northern Star Resources.