Solid results from two mid-tier miners yesterday in Northern Star and Mineral Resources which confirm the boom is not limited to megaminers like BHP and Rio.
Mineral Resources will deliver a record $1 fully-franked interim dividend after more than tripling its underlying first-half profit thanks to the surge in iron ore prices in the closing months of the six months to December.
The company revealed a 55% jump in first-half revenue to $1.53 billion, thanks chiefly to higher iron ore shipments and higher prices which touched multi year highs in November and December
The Company reported statutory earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) of $927 million.
Underlying EBITDA after stripping out one offs was $763 million, up 131% on the prior corresponding period.
Statutory net profit after tax was $519 million and underlying net profit after tax was $430 million, up 233% on the December, 2019 half.
Statutory NPAT included $26 million of post-tax impairment charges ($37 million pre-tax) in relation to intangibles, plant and equipment and inventory.
The fully franked interim dividend of 100 cents a share was up 335% on the interim dividend for six months to December 2019.
Ut marches the total of the 23 cents a share interim and 77 cents a share final for 2019-20.
The company said it exported a total of 7.9 million wet metric tonnes of iron ore, up 17% and produced record spodumene (a lithium ore) volumes at Mt Marion of 262,264 dry metric tonnes, up 36%.
In a statement with the results, CEO Chris Ellison said it had “been a very strong and successful six months for Mineral Resources.”
“Despite the backdrop of COVID-19, Mineral Resources has delivered outstanding operational and financial performance in the December half, demonstrating the strength of our business and the ability to maximise returns when commodities like iron ore are doing well. It also vindicates our decision to invest heavily across our iron ore business during the past few years.
“Likewise, Mt Marion has outperformed during this period to deliver record production volumes at lower costs, a remarkable achievement for a spodumene operation in what has been a challenging market. Pleasingly, we are seeing some positive signs in the lithium market and Mineral Resources is well positioned to benefit from this commodity’s upturn as the world renews its focus on green energy and demands greater volumes of high-quality spodumene concentrate,” he said.
The shares lost 0.5% to $36.80.
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Meanwhile gold miner, Northern Star has reported record profits, cashflow and interim dividend for the six months to December 31, 2020 ahead of the finalisation of its merger with Saracen this week.
The company said the results followed gold sales at the upper end of first-half guidance of 480,431 ounces.
And there’s a promise of more to come with the impact of the merger) with Northern Star forecasting production guidance for the full year of between 940,000oz – 1.06 million oz, “ ith the second half expected to be stronger than the first. “
Profit after tax rose 46% to a record $184.5 million and the interim dividend was lifted 27% 9.5¢ a share, fully franked.
This hollows from Northern Star’s policy of paying out the equivalent of 6% of revenue as dividends and has been calculated on the capital base which existed before the merger with Saracen.
Northern Star Executive Chair Bill Beament said the record performance showed the Company’s growth strategy was proceeding to plan.
“Our strategy is aimed at ensuring Northern Star generates strong growth at all levels while maintaining its industry-leading financial returns,” Mr Beament said.
“The record EBITDA of A$472M demonstrates that our growth plan is delivering superior results. This result came despite investing A$108M in exploration and expansionary capital and directing 39 per cent of our gold sales into hedges, which meant revenue was over A$100M lower than at spot prices.
“We are also generating significant growth in our business while maintaining our superior returns, as shown by the annualised average return on equity of 17.4 per cent.”
He said the enlarged Northern Star Group was primed for more growth at all levels, further increasing returns for Shareholders.
“After the Saracen merger is implemented on 12 February, our combined operations have a clear pathway to an annual production rate of 2Moz,” he forecast.
“It will also mean that Northern Star is growing at a time when so many of our global peers have flat or declining production and inventories.
“And by continuing to reduce our hedge book, we are ensuring that we can capitalise on this growth by increasing our exposure to what we believe will continue to be a strong gold price.”
The shares rose 1.6% to close at $12.09.
