Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northern Star Resources Ltd (NESRF) reported record underlying earnings for the second consecutive period, highlighting the success of their profitable growth strategy.
• The company achieved a record underlying EBITDA of 1.4 billion for the first half of FY25, marking a 58% increase from the previous period.
• Northern Star Resources Ltd (NESRF) declared an unfranked interim dividend of $0.25 per share, with expectations for future dividends to be partially or fully franked.
• The company maintains a strong balance sheet with a net cash position of 265 million and significant liquidity of 2.7 billion.
• The KCGMill expansion project is progressing on time and within budget, supporting future production growth.

Negative Points

• The company faces potential operational challenges due to weather conditions in Western Australia, which could impact production.
• There are concerns about the ability to catch up on production delays, particularly in the congested areas of the Super Pit.
• The integration of De Grey Mining could present challenges, including potential impacts on capital allocation and operational focus.
• Lease liabilities have increased, partly due to new renewable energy projects, which may affect future cash flow.
• The company is cautious about extending the share buyback program, indicating a need to assess capital allocation priorities post-acquisition of De Grey.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Sign with NESRF.

Q: Can you clarify the potential for the final dividend to be partially or fully franked and the possibility of extending the buyback? A: Ryan Gerner, CFO: We are moving towards a tax-paying position, which will allow for partially to fully franked dividends. The buyback program is independent of the De Grey acquisition and will be evaluated after the fiscal year-end.

Q: How are you prepared for potential weather disruptions in Western Australia? A: Unidentified Executive: The cyclone is primarily affecting De Grey. We have protocols in place, such as parking fleets and utilizing stockpiles, to manage wet conditions safely and efficiently.

Q: With the Golden Pike access delay, is there scope to increase production to catch up? A: Unidentified Executive: Catching up in mining is rare. We are managing the east wall well and expect favorable production from the high-grade pit floor over the next five years. However, the pit's limited real estate restricts the addition of more equipment.

Q: Can you provide insights on lease liabilities and the potential for converting leases to owned equipment? A: Ryan Gerner, CFO: Lease liabilities include the Dundee renewables project and some open pit gear. We aim to replace hired gear to reduce costs, and as operations ramp up, lease liabilities may increase.

Q: Are there any impacts from the new US administration on the Pogo operations? A: Unidentified Executive: No significant impacts have been observed. Pogo is insulated with a US cost base and revenue line, and it continues to generate strong cash flow despite potential policy changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.