The Northern Star (ASX: NST
) share price is up more than 5% after giving a June 2020 update.
What is Northern Star?
is one of Australia’s largest gold miners, with operations in Western Australia, Northern Territory and Alaska. NST claims to have tier-1 world-class mining projects in very promising regions thanks to their low sovereign risk. NST shares have performed exceptionally well since 2010 — when they traded at just 2 cents! — thanks to its very savvy management team and carefully executed acquisitions.
The golden update
Northern Star said that its cash, bullion and investments rose by 40% to AU$769.5 million at 30 June 2020 compared to March 2020.
The company said that its balance sheet was now net cash positive, with corporate bank debt of AU$700 million.
Northern Star generated underlying free cashflow of $217.9 million in the June quarter after selling 262,717 ounces of gold. This took total sales for FY20 to just over 900,000 ounces with 905,000 ounces of gold produced.
Northern Star dividend
The gold miner said that as a result of this update, the company will pay its FY20 interim dividend of 7.5 cents per share on 16 July 2020, totalling AU$55 million. The dividend was initially postponed due to COVID-19.
The company expects to resume normal dividends too. In the June quarter the miner reduced its hedge book to 536,426 ounces at AU$2,025 per ounce to increase its exposure to the spot price.
Summary
Northern Star has been an excellent investment for long term investors. Gold miners are seen as a hedge against negative market movements because gold generally goes in the opposition direction to share prices in the short term. The Northern Star share price is flying high at the moment, so I’m not sure now is the right time to buy.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
