The Northern Star Resources Limited(NST) is an Australian gold producer. The NST owns three gold production sites Kalgoorlie, Yandal, and Pogo. The NST is targeting to reach 2Mozpa by 2027 with Kalgoorlie (1.1M), Yandal (600k), and Pogo (300k). They are on the track. NST is mining 1.6MOz in group production now. They have updated their quarterly report on 10th February so I will update some information here.
| \A$m | FY17 | FY18 | FY19 | FY20 | FY21 | FY22-1H |
| Revenue | 869 | 964 | 1401 | 1972 | 2761 | 1807 |
| EBITDA | 426 | 447 | 489 | 798 | 1138 | 926 |
| Net income | 189 | 194 | 155 | 258 | 1033 | 261 |
| Share of outstanding | 613 | 615 | 645 | 695 | 1164 | 1164 |
| EPS = NPAT/Share of outstanding | 0.31 | 0.32 | 0.24 | 0.37 | 1.14 | 0.224 |
| Dividend (dollar) | 0.12 | 0.095 | 0.135 | 0.27 | 0.19 | 0.1 |
In the last five years, the company has gradually increased its revenue and profits. FY22-1H shows it is still the same trend before the gold price jumped to the 1900USD/oz level. If the gold price continues, it will be better in FY22-H2. The share of outstanding increases in FY21 because of the M&A of the gold mining company Saracen. 2021 might be an exceptional return we might need to watch. The share price now is 10.80@March 13th 2022 so the P/E ratio is 24.1 or so by using the number FY22-H1 times 2, so I believe is the share is now a bit overvalued compared to the end of FY21. But the price has come back because the gold price has risen since the war. I believe that NST bought Saracen in 2020 and 36% of their shares came from Saracen. I have felt Saracen shareholders didn’t like the deal because AISC of Saracen was much better.
| \A$m | FY17 | FY18 | FY19 | FY20 | FY21 | FY22Q1 | FY22Q2 | FY22-1H |
| AISC (A$/oz) | 1,013 | 1029 | 1296 | 1,496 | 1483 | 1594 | 1631 | 1613 |
| Gold sold k oz/ | 526 | 570 | 841 | 900 | 1595 | 386 | 393 | 779 |
| Average gold price realized (A$/oz) | 1,673 | 1704 | 1764 | 2208 | 2277 | 2345 | 2429 | 2388 |
| Operating cashflow (A$m) | 350 | 353 | 379 | 710 | 1077 | 622 | ||
| Mineral Resource Moz | 10.2 | 15.9 | 20.8 | 31.8 | 56.5 | — | — | — |
The AISC is the company that reported All-in Sustain Costs. The gold price is about 1700-1900USD/oz since July 2020 with roughly AUD/USD = 0.73, after Russia’s invasion of Ukraine, the gold price rose to around 2000USD (= 2739 AUD) in March 2022. The gold price on average in FY22-2 is about 2388 AUD/oz. I think the current level of gold price and AUD/USD continues 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. The AISC is increasing. 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 aiming 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 aim at 1550-1650koz of Gold production (usually the same level as gold sold ) with 1,475-1,575AUD/tons of AISC (but actual for FY22-H1 = 1613). So if they can run it as they promised and the average gold price realized, it should be 1.6M*(2602-1613) = 1240 million. The EPS should be the same level as FY21 which is 1.07. If I want P/E = 10, the NST share price is 10.7, not it is below the share price of 10.8@March 13th 2022. The price is reasonable now. Also, they are trying to reach 2MOz of gold production by 2027, a 25% increase over 5 years. But this needs to be analysed carefully and depends on the gold price and production continues. However, since governments around the world are printing money so much because of the pandemics and the price has jumped after the war in February 2022, I believe the gold price should go up while it could break historical the highest level about 2035 USD/oz. So you might want to either put gold or NST to protect your financial assets during this difficult time.
| \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. In FY22-H1, NST made a net repayment of A$361 of corporate bank debt.
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.