Northern Star plots second golden era

Ahhh…to have punted a spare A$10,000 back in 2010 on the then fledging gold producer Northern Star (writes Barry FitzGerald on MiningNews).
2nd October 2020
Resources Rising Stars

Ahhh…to have punted a spare A$10,000 back in 2010 on the then fledging gold producer Northern Star (writes Barry FitzGerald on MiningNews).

The initial outlay would now be worth more than $1 million thanks to a total shareholder return (TSR) over the journey of some 11,000%.

The maths comes from Bill Beament, Northern Star's executive chairman, speaking at the group's recent (virtual) annual strategy day.

He was making the point that under his mantra of Northern Star being a business first and a mining company second, the growth in TSR over 10 years has been exceptional.

The 10-year measuring stick was appropriate too because it was in July 2010 that Northern Star's growth into the $10.5 billion second-ranked Aussie gold producer it is today got going with its acquisition of the now-idled Paulsens mine in the Pilbara.

Paulsens was initially good for 100,000oz annually. Through a combination of the subsequent acquisition of additional gold operations in need of renovation, and organic growth from operational excellence and exploration, Northern Star has gone on to become the 905,000oz producer it was in FY2020.

The reward from the focus on being a business first comes through in Northern Star's 10-year average return on equity of 28%, and its 10-year average return on invested capital of 24%.

The rise in the Australian dollar gold price has been a major factor in those stellar returns. All boats have risen with the tide, but not all have posted a 10-year TSR of 11,000%.

With the gold price coming under pressure of late, it is reasonable to ponder if Northern Star is in line for a repeat performance in the next 10 years. Without the help of a stronger gold price, it is most unlikely.

But its golden era of shareholder wealth creation is not over. Not by a long shot.

Somewhat tantalisingly, Beament again used the annual strategy day to talk about the "global gold landscape'' and Northern Star's current 15th ranking as a producer.

Read more at https://www.miningnews.net/barry-fitzgerald/opinion/1396121/northern-star-plots-second-golden-era

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