A record interim dividend announced Monday for shareholders in Northern Star Resources, but is this about as good as it will get for the gold miner as it faces continuing cost pressures?
Northern Star will pay out a fully-franked interim dividend of 11 cents per share, up 10% (1 cents) from the 10c per share dividend paid for the first half of the 2021–22 year.
The higher dividend was on a small, 3% rise in cash earnings to $467 million.
Underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) fell 12% to $721.5 million to $632.7 million because of higher costs.
Underlying net profit after tax fell to $55 million from $124 million because of a series of small one-offs.
Half-year revenue rose 5% to $1.95 billion thanks to a higher average gold price of $A2513 per ounce (oz), compared with $A2388/oz in the first half 2021-22.
“The strength and resilience of our world-class gold assets in Western Australia and Alaska were on show in the first half and delivered significant cash earnings despite the industry wide cost pressures,” said Northern Star CEO Stuart Tonkin in Monday’s statement to the ASX.
“This has enabled the board to declare a record interim dividend of 11 cents per share, at the top end of our dividend policy and complementing the $300 million share buy-back that commenced during the half.”
The buyback started last September and is 42% complete ($127 million). It ends in September.
Gold sales in the half totalled 773,243oz and about square with the 778,815oz sold in the December, 2021 half year..
Tonkin said Northern Star continues to advance its growth strategy en route to becoming a 2-million-ounce-per-annum gold producer by FY26.
“Key growth projects Pogo and Thunderbox are delivering significant cost improvements,” Tonkin said.
“A continued focus in the second half on costs across all three operating centres, alongside the expected lift in group production to meet our FY23 guidance, should further build cash to maintain Northern Star’s strong financial position.”
But costs are a concern, Directors said in the statement that “Cost of sales were higher than the comparative period. Generally, the increase arose from higher average cash operating costs per ounce (H1 2023: A$1,475/oz vs H1 2022: A$1,256/oz) because of inflationary pressures across the mining industry that were not materially experienced during H1 2022.”
And shareholders will have to contend with a period of dividends being unfranked, as Northern Star explained: “Post the payment of its FY23 interim dividend, Northern Star has a franking credit balance of A$3 million. The Board anticipates any future potential dividends to be unfranked for at least 18 months, due to tax synergies arising from the merger with Saracen,” (which brough it control of the Super Pit mine near Kalgoorlie).
North Star shares eased 1.5% to $11.22.
