Is Northern Star’s Share Price Riding Its Own Success or Someone Else’s?

The share price of Northern Star Resources Ltd [ASX:NST] is up slightly today upon the release of its December quarter results.

At the time of writing the NST share price is up 0.71% or 9.5 cents, trading at $13.51 per share.

ASX NST Share Price Chart

Source: Tradingview

Although there are certainly positives in NST’s December results, they aren’t overly impressive in my opinion.

Which begs the question: is the NST for now pegged to the share price of Saracen Mineral Holdings Ltd [ASX:SAR]?

Guidance remains on point

Perhaps the highlight from NST’s December quarter was the amount of gold sold, up 11% to 252,899 ounces hitting the upper end of quarterly guidance of 226,000 to 254,000oz.

Gold sold in the first half of FY21 totalled 480,431oz, falling in line with NST’s full-year guidance of 940,000–1,060,000oz.

Oddly, NST jumped the gun somewhat when publishing its unaudited net profit after tax.

Its initial update, released before trade began this morning, reported net profit of roughly $100 million for the quarter.

However, the miner released an amendment hours later saying net profit was around $75­–$85 million.

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Production was good across its operations, with the standout being its joint venture with SAR, the KCGM project having sold 198,701oz at an all-in-sustaining-cost (AISC) of AUD$1,526/oz during the half.

The solid production and cash flow enabled the miner to cut its corporate debt by $125 million to $375 million while cash, bullion and investments stood at $372 million.

NST Executive Chair Bill Beament said the results showed the company was meeting its operational, financial and strategic goals on all levels.

Our Australian operations, including KCGM, performed very well. The results at the Yandal Operations were again exceptional and further progress was made in our push to increase production and lower costs at our Kalgoorlie Operations.’

Why is this someone else’s success?

From late-November onwards, the NST and SAR share prices have moved in unison after both companies announced their boards unanimously support merging the two miners.

Take a look how their share prices have behaved since:

Northern Star Minerals Share Price Chart

Source: Tradingview

To be clear, I’m not painting NST in a negative light, merely trying to convey what has been happening in the share price.

Despite the record gold prices we’ve experienced recently, NST shares have failed to perform, in my opinion.

In the past 12 months they have only returned 6%, while SAR shares have returned 34.55%.

SAR will also pay a special dividend of 3.8 cents per share upon completing the merger.

If you’re looking for more information about the merger and what it means for both companies, you can find it here.

Otherwise, be sure to check out our free report on how to pick winning gold stocks. In it we’ll give you the dos and don’ts of investing in gold companies. Get your free copy here.

 

Regards,

Lachlann Tierney
For The Rum Rebellion


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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