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Record dividend for Northern Star as growth strategy delivers cash earnings boost

22nd February 2024

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Australian gold miner Northern Star on Thursday declared a record interim dividend of 15c a share, complementing its A$300-million share buyback programme that remains open.

Driven by higher gold prices, the ASX-listed company delivered a 41% increase in underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) and a 50% increase in cash earnings to A$702-million during the first half of the 2024 financial year.

Notwithstanding significant growth capital, Northern Star also posted underlying free cash flow of A$131-million in the six months.

“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,” said MD Stuart Tonkin.

The highlight of the group’s strong half was the performance of the Kalgoorlie production centre, which contributed more than half of Ebitda and record Ebitda margins of 44%.

Tonkin noted that cost pressures remained prevalent across the industry, including higher gold royalties, fuel costs and a weaker Australian dollar.

“Costs continue to be a key focus for our teams as we work towards delivering our 2024 guidance, which remains second-half weighted,” he said.

The miner’s guidance is 1.6-million to 1.75-million ounces of gold sold at an all-in sustaining cost of A$1 730/oz to A$1 790/oz.

Growth capital of A$1.15-billion to A$1.25-billion has been allocated for the full year.

Moody’s Investors Service analyst Mariano Ferreyra commented that while Northern Star’s organic growth plans required significant capital spending and would limit free cash flow generation in the near term, the company’s strong liquidity position and operating cash flows would comfortably fund its capital expenditure programme.

“We expect Northern Star will continue to maintain a strong financial and liquidity profile throughout its current growth phase, operating comfortably within its publicly stated financial policy targets and our rating thresholds,” said Ferreyra.

Edited by Creamer Media Reporter

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