Rising Costs and Debt Pose Challenges Despite Northern Star’s Profit Boom

Robust Financial Performance Amid Rising Gold Prices

Northern Star Resources Limited (ASX: NST) has delivered a standout half-year financial result for the six months ended 31 December 2024, with revenue climbing 28% to $2.87 billion and net profit after tax soaring 155% to $506.4 million. This performance reflects a combination of elevated gold prices and steady production volumes across its key mining operations.

The company sold 804,140 ounces of gold during the period, a modest increase from 780,785 ounces in the prior corresponding period, at an average realised price of A$3,562 per ounce, up 24% year-on-year. Despite a 7% rise in cost of sales, driven by higher mining and processing expenses as well as increased royalties, Northern Star maintained strong margins, with an all-in sustaining cost of A$2,105 per ounce.

Operational Highlights and Capital Investment

Ore was sourced from multiple sites including KCGM, Carosue Dam, Kalgoorlie Operations, Jundee, Thunderbox, and Pogo in Alaska. The company milled nearly 13.9 million tonnes of material with an average head grade of 2.0 grams per tonne and achieved an 86% recovery rate. Notably, the KCGM Mill Expansion Project remains a focal point, with capital expenditure of $748 million committed to modernise and double processing capacity.

Exploration expenditure nearly doubled to $122.6 million, reflecting Northern Star’s commitment to extending mine life and growing reserves. However, an impairment charge of $24.7 million was recognised on certain exploration assets where future activity is not expected.

Balance Sheet Strength and Cash Flow

Total assets increased by $710.8 million to $13.79 billion, supported by ongoing investments and inventory build-up. Liabilities rose to $4.85 billion, influenced by higher lease liabilities related to renewable energy projects and foreign exchange impacts on USD-denominated debt.

Operating cash flow surged 49% to $1.25 billion, while free cash flow more than tripled to $397 million. The company continued its $300 million share buy-back program, spending $82.2 million during the half, alongside paying $279.9 million in dividends.

Dividend and Strategic Outlook

Reflecting confidence in its financial position, Northern Star declared an interim unfranked dividend of 25.0 cents per share, consistent with the prior final dividend and representing a 25% payout of cash earnings. The dividend record date is 6 March 2025, with payment scheduled for 27 March 2025.

Strategically, the company announced a binding Scheme Implementation Deed to acquire De Grey Mining Ltd, aiming to expand its footprint in Western Australia. The deal, subject to shareholder and court approvals, is expected to complete in May 2025 and could significantly enhance Northern Star’s resource base.

Governance and Compliance

The half-year report was reviewed by Deloitte Touche Tohmatsu, who issued an unqualified review opinion. The company continues to comply with environmental regulations and maintains a policy of exceeding statutory obligations, with oversight by its Board and Environmental, Social & Safety Committee.

Overall, Northern Star’s half-year results demonstrate operational resilience and financial discipline amid a volatile gold market, positioning it well for future growth and shareholder returns.