PERTH (miningweekly.com) – An increase in gold sales and higher gold prices has seen miner Northern Star report record underlying net profit for the full year ended June, with the company declaring a special divided.
Underlying net profit after tax for the 2020 financial year reached a record A$291-million, up 69% on the A$171.9-million reported last year, while group earnings before interest, taxes, depreciation and amortisation was up 55% to a record A$745.4-million, from A$479.7-million in 2019.
A record 900 388 oz of gold was sold in the 2020 financial year at an average price of A$2 208/oz, compared with the A$1 764/oz gold price achieved in 2019, while gold production in the full 2020 reached 905 177 oz.
Northern Star told shareholders that its Jundee operations produced a record 300 150 oz during the full year under review, while the Kalgoorlie operation delivered 318 759 oz from Kanowna Belle, Kundana, South Kalgoorlie and the East Kindana joint venture (JV).
The Pogo mine in Alaska produced 174 307 oz in the 12 months to June, while the Super Pit JV also contributed 111 961 oz. The acquisition of a 50% interest in the Super Pit was included in Northern Star’s account from January this year.
Executive chairperson Bill Beament said on Wednesday that the company was strategically placed to capitalise on the strong gold price currently being achieved.
“We are on track to generate further significant increases in cashflow thanks to our substantial leverage to the gold price, our growing production profile and having one of the lowest capital intensity in the industry.
“We have resources of almost 32-million ounces, including reserves of 10.8-million ounces, in tier-1 locations and we are generating strong organic growth as a result of our investment in exploration and development.
“The increased inventory, including our 9.5-million-ounce resource and 4.85-million-ounce reserve announced at KCGM this week, underpins our plan to grow production to 1.3-million ounces a year,” Beament said.
“We also have a pipeline of future growth opportunities in and around our other assets and infrastructure, which will help us drive ongoing increases in cashflow while maintaining our superior financial returns.”
Northern Star earlier this week revealed that gold production for 2021 is expected to reach between 940 000 oz and 1.06-million ounces, with the company allowing for A$198-million in capital growth budget and A$101-million for exploration.
“With the company’s growth strategies, including an aggressive exploration and development programme, as well as an increase in processing capacity at the Yandal operations, expected to be comfortably funded from cashflow, the board is faced with the option of accelerating debt reduction, retaining a large cash holding or increasing the return to shareholders,” Beament said.
“The board believes that given the historically low interest rate environment and the company’s’ relatively low gearing levels, accelerated debt repayment is an inefficient use of capital. In light of these factors, and in recognition of the growing calls among both institutional and retail shareholders for companies to return excess cash to shareholders, the board opted to declare a special dividend.”
A final dividend of 9.5c and a special dividend of 10c will be paid.