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Northern Star grows and grows

Northern Star

Northern Star Resources is enjoying the fruits of its labour after the company’s net profit after tax (NPAT) climbed in the half year.

Northern Star reported a 63 per cent increase in revenue in the six months to December 31, 2021, compared to the corresponding 2020 half year, which saw its NPAT increase by 43 per cent ($261 million) across the same timeframe.

The Tier 1 gold miner experienced total revenue of $1.81 billion and cash earnings of $430 million for the second half of 2021.

The company attributed its revenue jump to an increase in gold sold, furthered by the contribution of assets from the merger with Saracen Minerals Holdings.

The Saracen merger was completed in February 2021 meaning no sales from the Thunderbox and Carosue Dam mines in Western Australia (previously owned by Saracen), and 50 per cent of Kalgoorlie Consolidated Gold Mines (KCGM), were included in the prior half year to end 2020.

Despite Northern Star’s relative windfalls, the company experienced a 103 per cent increase in cost of sales compared to the second half of 2020.

“Generally, the increase arose from a combination of increased activity with the inclusion of the merger assets in the current half (107 per cent increase period on period), higher average cash costs per ounce, and the increase in depreciation and amortisation unit costs (increase of $291/sold oz),” Northern Star stated in its half-year financial report.

Northern Star sold a total of 778,815 oz of gold at an average of $2388/oz in the second half of 2021. The all-in sustaining cost during this period was $1613/oz sold.

Other contributions to Northern Star’s balance sheet for the half year included the company’s sale of the Kundana assets in WA to Evolution Mining, which was completed in August 2021. This led to a pre-tax gain of $242 million.

Northern Star said its “total assets broadly remained consistent compared to 30 June 2021”.

“This is despite a lower cash and cash equivalents balance due to the net repayment of $361 million of corporate bank debt,” the company continued.

“The acquisition of Newmont’s power business was also completed in the period for total purchase consideration of $US95 million ($130 million) and the group made a $C154 million ($170 million) investment in a convertible debenture with Osisko Mining Inc.”

Northern Star purchased Newmont’s GMK Investments, which owns Newmont Power and NP Kalgoorlie, in November 2021.

This formed part of Northern Star’s acquisition of a 50 per cent interest in KCGM, which was confirmed in early 2020.

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