By Dan Stratful
Monday 7th November 2011
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Northern Star Resources (ASX: NST) is an exciting prospect on the Australian market and the emerging gold producer and exploration company operates in the highly prospective regions of Ashburton, West Pilbara, Murchison and Kimberley, Western Australia.
NST’s key asset is the high grade, high margin Paulsens Gold Mine which it acquired from Intrepid Mines in July 2010, instantly turning it into a gold producer. NST is working to establish its second operating mine - the Ashburton Project - which is within trucking distance of the Paulsens processing plant.
NST sprung to life after the July 2010 acquisition of the Paulsens Gold Mine which saw its shares trading at just 5c prior to the acquisition. Post acquisition NST’s shares have increased 10-fold as the acquisition proved smart and profitable. The acquisition saw NST evolve from a small Kimberley explorer to a highly profitable gold miner with enviable growth prospects and a host of other opportunities.
In the year ending 30 June 2011 NST reported its maiden profit of $20 million, and this was after including $40 million in acquisition costs for the Paulsens purchase, and a further $10 million in CAPEX to significantly increase the mine’s life. NST is debt free and ideally positioned to become one of Australia's leading gold producers and its strategy is to increase production to 200,000 ounces a year.
The recent pull back in the gold price from US$1,920 per oz to US$1,765 per oz has seen the shares take a well-earned rest which provides a buying opportunity for investors. NST might appeal to gold bugs who may view the company as a speculative small cap alternative to other mid and large cap gold producers such as Newcrest Mining.
Status: SPECULATIVE BUY
NST’s shares today traded at 59c.
For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, firstname.lastname@example.org
**A disclosure statement is available, on request and free of charge.
In accordance with the Financial Advisers Act 2008 (“the Act”) Sharechat is “Class Advice” and any advice or recommendations contained on this webpage is not “Personalised Advice” as defined by the Act. This means Sharechat does not take into account an investor’s particular financial position, financial needs, financial goals, risk profile or asset allocation. Investor’s who require “Personalised Advice” should contact an Authorised Financial Adviser (AFA).
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