Some analysts were looking for more than the 9% rise in annual net profit that Northern Star Resources (ASX:NST) reported for the year to June on Thursday.
Net profit hit a record $639 million, but some analysts had been expecting a 15% rise in statutory after-tax earnings. This was a miss.
However, the real story was in cash earnings, the company's preferred reporting measure. These soared 48% to $1.81 billion.
This was thanks to the dramatic rise in gold prices, especially in the final months of the June 30 fiscal year, as well as strong cost control throughout the year.
This saw revenue jump 19% to $4.92 billion and underlying EBITDA leap 43% to $2.19 billion.
The 15% rise in the average gold price received helped. This amplified the 4% rise in gold sales to 1.6 million ounces, at the lower end of its guidance range (and already outlined in the annual production and sales report in July).
This gold was sold at an average cost of $A1,853 an ounce, up just 5% from a year earlier. This was a respectable outcome given the continuing inflation across the mining sector.
Northern Star declared an unfranked final dividend of 25 cents a share, exceeding market estimates of 21.4 cents. This brought the total dividend to 40 cents per share, up from 26.5 cents a share in 2022-23.
Directors said the company would extend its on-market share buy-back for 12 months, with $128 million remaining of the $300 million program.
The company confirmed the 2024-25 guidance outlined in the 2024 production and sales report released in late July, stating:
"Northern Star's financial position remains strong, with net cash of A$358 million. The Company's FY25 growth program is fully funded and supports our clearly defined capital management framework.
"The Company is on track to deliver 1,650-1,800 koz gold sold at an AISC (All-In Sustaining Cost) of $1,850-2,100/oz in FY25.
"Gold sold will be weighted towards 2H as a result of increased production from higher grades at KCGM and improved mill availability at Thunderbox and Pogo. For the September quarter, planned major shutdowns will be carried out across all three production centres.
"FY25 growth capital expenditure is forecast to be in the range of A$950-1,020 million plus the KCGM Mill Expansion capex of A$500-530 million, which is in the second year of its build phase. Sustaining capital expenditure is forecast to be in the range of A$200-250/oz."
Northern Star said its three production centres of Kalgoorlie and Yandal in Western Australia and Pogo in Alaska all contributed strongly towards group earnings during the year, reflecting strong operational performance and thanks to the elevated gold prices.
The group again warned that there will be extensive maintenance-related shutdowns at all three centres this quarter. This means gold production will be lower for the three months to September, but then pick up in the December quarter and accelerate in the six months to June, 2025.
And the result was given a big tick by analysts at Moody's Ratings.
"Northern Star Resources' (NST) results for fiscal 2024 were better than our expectations," Moody's wrote on Thursday. "The company delivered strong earnings growth on the back of higher-than-anticipated gold prices and increased gold production despite cost inflation pressures."
"While cost pressures will remain elevated over the next 12 months, NST's earnings will continue to benefit from expanded production volumes and high gold prices that will remain supported by central bank purchases and increased investor appetite. We expect NST's unit costs to improve as its overall annual gold production rises to around 2 million ounces by fiscal 2026.
"We anticipate the company's sizable capital expenditure, including the KCGM Mill expansion, over the next few years will limit its free cash flow. However, we expect NST 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," Moody's added.
