The Northern Star (NST) is an Australian gold producer. The NST owns three gold production sites Kalgoorlie, Yandal, and Pogo. They are targeting to reach 2Mozpa by 2027 with Kalgoorlie (1.1M), Yandal (600k), and Pogo (300k). And currently, they are mining 1.6MOz in group production.
| \A$m | FY17 | FY18 | FY19 | FY20 | FY21 |
| Revenue | 869 | 964 | 1401 | 1972 | 2761 |
| EBITDA | 426 | 447 | 489 | 798 | 1138 |
| Net income | 189 | 194 | 155 | 258 | 1033 |
| Share of outstanding(*) | 613 | 615 | 645 | 695 | 904 |
| EPS = NPAT/Share of outstanding | 0.31 | 0.32 | 0.24 | 0.37 | 1.14 |
| Dividend (dollar) | 0.12 | 0.095 | 0.135 | 0.27 | 0.19 |
In the last five years, the company has gradually increased its revenue and profits. Also, the share of outstanding increases as well because of the M&A of the gold mining company Saracen. 2021 might be an exceptional return we might need to watch. However, if it continues, shares now are about 8.91 so the P/E ratio is 7.82 or so, so I believe is the share is undervalued. But the price has not come back, actually, the share price keeps going down for over a year. So there might be a reason for it. I am thinking that NST bought Saracen in 2020 and 36% of their shares came from Saracen. I have felt Saracen shareholders didn’t like the deal because AISC of Saracen was much better. (*) Diluted shares outstanding, the WSJ website says so it is a slightly larger number than basic shares outstanding
| \A$m | FY17 | FY18 | FY19 | FY20 | FY21 |
| AISC (A$/oz) | 1,013 | 1029 | 1296 | 1,496 | 1483 |
| Gold sold k oz/year | 526 | 570 | 841 | 900 | 1595 |
| Average gold price realized (A$/oz) | 1,673 | 1704 | 1764 | 2208 | 2277 |
| Operating mine cashflow (A$m) | 350 | 353 | 379 | 710 | 1077 |
| Mineral Resource Moz | 10.2 | 15.9 | 20.8 | 31.8 | 56.5 |
The AISC is the company reported All-in Sustain Cost. The gold price is about 1700-1900USD/oz since July 2020 with roughly AUD/USD = 0.73 so I believe roughly 2328 (1700USD), 2465(1800USD), 2602(1900) AUD/oz. I think the current level of gold price and AUD/USD continues so the NST can make money comfortably at the FY21 year level. However, I hope they can do better on the cost down as they could do a few years ago so they can make more money. Hope I can see that progress a few years after they took over the Saracen. The gold sold is going 1.6 Moz level now jumped at FY21 and they are gaming at the production of 2 Moz by 2027. The mineral resources are increasing over the 5 years, and jumped at FY21 because of the merger with Saracen and also their explorations.
They are aiming at 1550-1650koz of Gold production (usually the same level as gold sold ) with 1,475-1,575AUD/tons of AISC. So if they can run it as they promised and averaged gold price realized, it should be 1.6M*(2277-1525) = 1203.2 million. So the gross profit could be the same as FY21. The EPS should be the same level as FY21 which is 1.14. Even if I want P/E = 10, the NST share price is 11.4, comfortably below the share price of 9.06@October 7th 2021. Also, they are trying to reach 2MOz of gold production by 2027, a 25% increase over 5 years. But this needs to carefully add analysis and depends on the gold price and production continues. However, since governments around the world are printing money so much, I believe the gold price should go up in long term. So you might want to either put gold or NST to protect your financial assets.
| \A$m | FY17 | FY18 | FY19 | FY20 | FY21 |
| Current Assets | 486 | 558 | 454 | 1110 | 1840 |
| Current Liability | 175 | 200 | 218 | 638 | 771 |
| Current ratio | 2.78 | 2.79 | 2.08 | 1.73 | 2.39 |
| Non-current liability | 135 | 195 | 310 | 1029 | 2499 |
| Total assets | 924 | 1220 | 1640 | 3810 | 11250 |
| Total liability | 310 | 395 | 529 | 1670 | 3270 |
| Total equity | 614 | 821 | 1110 | 2140 | 7980 |
Did I miss something else? The debt of the company. Operational-wise, the company is doing great for manageable liability. I am a bit concerned about the increase in the last two years. On the other hand, total assets also jumped. I am not worried about the operations at the moment.
Currently, the Northern Star is the second largest gold mining and exploration company in ASX after Newcrest Mining (ASX: NCM). The NCM is roughly double the size of NST now. Maybe next time update, I will compare these two companies. Also, I could take a look at their cashflows.