The resource sector continues to yield solid to outstanding June 30 reports.
BHP Billiton Tuesday joined Fortescue Metals on Monday and Rio Tinto two weeks ago in revealing that iron ore is the place to be with big profit rises and higher dividends.
Gold too has helped the likes of Newcrest Mining and Evolution Mining to produce better than expected results and higher payouts as the global price enjoyed buoyant conditions in the closing months of the year. The weaker Aussie dollar for part of the year helped of course (for those companies that report in local currency, unlike the likes of Newcrest).
Adding to the growing list of solid resource companies reporting earnings was WA based gold miner, Northern Star Resources which revealed sharply higher net profit on a small dip in revenue.
Net profit for the 2017 financial year rose 42% to a record $215.3 million, up from $151.4 million a year earlier.
Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 16% to a record $461.3 million on revenue down by just 0.4% to $883.8 million, due to the sale of its gold Plutonic gold mine in the year.
The company said the result was after spending $130 million at its existing mines to boost gold production this financial year to 600,000 ounces. The company said it sold 526,515 ounces during 2016-17 at an average price of $A1,675/oz.
"These results reflect an outstanding year for Northern Star. We have again met or exceeded our guidance figures, these are high-quality earnings which flow from world-class operations in a Tier-1 jurisdiction and we have generated significant free cashflow which has led to a 50% increase in the final dividend,” executive chairman Bill Beament said in the statement on Tuesday.
“But perhaps even more importantly, these results provide valuable insight into the company’s future cash-generating capacity and overall financial returns."
He revealed that Northern Star had adopted a capital management plan – announcing it would pay dividends equal to 6% of its revenue while maintaining a minimum cash balance of $300 million ($447 million at June 30).
The miner declared a 6c per share fully franked final dividend, up 50 per cent from a year earlier to reflect its new policy. The final was up from 4 cents a share, making a full year payout of 9 cents a share.
The company said "total Reserves rose 2.3 million ounces (Moz) oz to 3.5Moz (despite depletion of 546,000oz in FY2017) at a cost of just A$24/oz; Resources increased by 2.7Moz to 10.2Moz; Measured and Indicated Resources up 58% to 6.3Moz, underpinning significant growth in mine lives.”
