In today’s daily we have covered stock research on Northern Star Resources (SELL).
The S&P 500 was up by 3.41 points or 0.16% on Tuesday and closed at 2095.84 points. The Dow and S&P 500 ended higher on Tuesday, helped by energy stocks and March-quarter earnings reports that topped modest expectations, but the Nasdaq closed lower. CSX shares climbed late on Tuesday after the railroad company reported better than expected first-quarter profits and announced a new share buyback plan.
The S&P 500 energy sector climbed 1.8 per cent, on the back of a fourth straight advance in the price of oil. Ensco was the biggest per cent gainer on the S&P 500, rising 6.6 per cent to $25.17. Diamond Offshore Drilling, Transocean and Chesapeake Energy were among the best performers. Intel on Tuesday said revenues for the first quarter of the year held at $12.8bn, though profits edged up to $2bn, or 41 cents a share, from $1.9bn, or 38 cents, in the year ago period.
INTEL Daily Chart (Source - Thomson Reuters)
S&P ASX 200 was down by 13.70 points or 0.23% on Tuesday and closed at 5946.60 points. On Tuesday, big miners Rio Tinto and BHP Billiton weighed on the index, despite iron ore improving 2.7 per cent to $US48.82 per tonne. BHP shares fell 1 per cent to $29.12 and Rio Tinto dropped 0.6 per cent to $54.96. Fortescue Metals bucked the trend jumping 3.4 per cent to $1.835. The big four banks were also down on Tuesday. Commonwealth Bank of Australia lost 0.3 per cent to $93.80, ANZ dipped 1.1 per cent to $36.32, NAB lost 0.4 per cent to $39.43 and Westpac Banking Corp finished 0.5 per cent lower at $39.56.
Suncorp Group named Michael Cameron, the currently managing director and chief executive of GPT Group as its new chief executive. Mr Cameron has been at the helm of GPT for six years. Suncorp added 2 per cent after announcing a new CEO, while energy stocks enjoyed rises. Iron ore delivered to the port of Qingdao, China, rose to about $US50 per tonne. The SPI was 10 points higher at 5948 shortly before 5am AEST.
SUNCORP Daily Chart (Source - Thomson Reuters)
Top Performers on the ASX 200 were :-
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Northern Star Resources
Stock Of The Day - Northern Star Resources (SELL)
Northern Star Resources Limited (NST) reported for its 1HFY15 result for the period ending 31 December 2014, wherein the sales revenue was of the order of A$412m with an increase of 471% over pcp. There was a 573% rise in NPAT of A$51m over the pcp. A$120m was reported to be the cash along with A$35m debt for the half year.
NPAT and Revenue (Source – Company Reports)
The Company also announced about the interim dividend of 2cps fully franked, which looked quite lower than the market’s expectations of around 4cps considering the cashflow.
Results for the December 2014 Quarter (Source – Company Reports)
The December 2014 quarter updates on operations included total gold sold at 142,556oz (as per the guidance); all-in sustaining cost (AISC) of A$1,073/oz; and average realised price of A$1,417/oz. Jundee Gold Operations recorded 65,603oz mined and 55,060oz recovered with AISC of A$953/oz. The drilling results were noted up to 3,040gpt indicating slight potential to grow resources and mine life. Kundana Gold Operations recorded 29,538oz mined and 29,566oz recovered with AISC of A$632/oz. Here, the drilling results led to discovery of the 100% owned Millennium deposit. Further, Kanowna Belle Gold Operations recorded 21,892oz mined and 21,820oz recovered with AISC of A$1,092/oz. Drilling results of up to 5,328gpt leading to White Feather discovery were illustrated. Plutonic Gold Operations recorded 20,494oz mined and 17,381oz recovered with AISC of A$1,787/oz. Paulsens Gold Operations recorded 16,179oz mined and 17,225oz recovered with AISC of A$1,453/oz. For the quarter, the Company reported underlying free cashflow generation of A$52.5m. Debt cut by A$15m to A$35m was also noted. The bank debt is expected to be ending early in the June quarter. NST paid A$14.5m fully-franked final dividend during the quarter. A$119.1m was reported to be the cash and cash equivalents on hand at 31 December. Total operating expenses have been seen to be reducing month on month with the highlight that the expenses are running 10% below July 2014 levels owing to increases in productivity and efficiencies.
Jundee Mine (Source – Company Reports)
In the March 2015 updates, NST confirmed that the total revised resource at Pegasus (part of Kundana Project) is three million tonnes at 11.6gpt. Similarly, there has been a surge in resources by 299,000oz to 1.15moz (9.2Mt at 3.9gpt) at the Jundee Gold mine. The reserves have also increased by 32,000oz to 415,000oz (2.7Mt at 4.7gpt).
Completion of the acquisition of the Hermes Gold Project in WA’s Bryah Basin from Alchemy Resources Limited has also been recently announced by the Company. NST has acquired a 14.57% interest in Alchemy. Another update entails around Tanami Gold’s shareholders voting in favor of a resolution with regards to approving proposed joint venture between Tanami and NST. Through this, NST will gradually acquire 60% interest in the Central Tanami Project. The transaction is associated with an initial 25% interest of NST through paying of A$11m in cash and 4.29m NST shares for total initial value A$20m. Nonetheless, this is subject to regulatory and third-party approvals, and other appropriate conditions.
As per the latest resources update, we still feel that the Company did not report many significant drill results. The short mine life such as that of Jundee (at less than 4 years) and its accountability for 40% of NST’s production, we feel that a lot more needs to be done to leverage on mine potential. We do not see any game changing highlight in view of the recent mines’ updates on resource growth potential.
FY2015 Guidance (Source – Company Reports)
The current deals (such as the one on Hermes project which may help with additional mill feed for Plutonic) also look insignificant and may only provide slight exploration upside without materially benefitting NST. It appears that the Company does not intend to venture into any large and competitive tendering process. Given this and the recent surge in share price, we think that NST is currently trading around its full value.
NST Daily Chart (Source - Thomson Reuters)
Based on the foregoing, we put a
SELL recommendation for the stock at the current price of $2.27.
Level 13 167 Macquarie Street
Sydney NSW 2000 Australia
E-Mail - [email protected]
Phone - 02 8667 3147
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