Gold lights up Northern Star's world
The nature of annual profit reports is that they are but snapshots of history, writes Barry FitzGerald
30th August 2019
Resources Rising Stars
The nature of annual profit reports is that they are but snapshots of history, writes Barry FitzGerald on (MiningNews).
Northern Star's executive chairman Bill Beament must have had that in mind when fronting the group's investor call for its 2019FY profit report on Tuesday morning.
Beament ran through the profit figures all right, but his real message was that we are in exceptional times for the Australian gold industry thanks to the local price for the yellow metal marching in to record territory.
Northern Star's realised gold price for the 2019FY was A$1764/oz. Today the price is $2284/oz or some $520/oz higher than last year's average.
"When this sharply higher price is applied to our 2020FY guidance (800,000-900,000/oz at $1200-1300/oz), the true benefits of our investment strategy become clear," Beament said.
Beament did not help out with the maths on what a $520/oz higher gold price could be worth to Northern Star's net profit after tax, if sustained for a full year.
Take away the gold royalty and corporate tax from the $416-468 million revenue boost that a sustained $520/oz increase would deliver, and the NPAT increase would be something like $284 million to $319 million, with a mid-point of $301 million.
That potential boost - consensus is for gold prices to remain strong, with US dollar gold in particular still well short of record levels - is kind of interesting given Northern Star's underlying profit for the year gone was $179.2 million.
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