Why Northern Star Resources Ltd Jumped Today

At the time of writing, shares of Northern Star Resources Ltd [ASX:NST] are up by 16.67%, now trading for $8.12 per share.

Why did Northern Star Resources Ltd shares do this?

Northern Star Resources completed an institutional placement to raise ~$175 million at $6.70. Proceeds will be used to help fund the acquisition of the high-grade 4.1 million ounce Pogo underground gold mine in Alaska.

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What now for Northern Star Resources Ltd?

Last week, the company announced it would buy the project from Sumitomo Metal Mining (85% interest) and Sumitomo Corporation (15% interest) for US$260 million (A$347 million). Today’s capital raising, alongside Northern Star’s existing cash balance, should close the deal.

Pogo looks like a top-notch gold mine:

Northern Star Resources

Source: Northern Star Resources

Across Australia, US and Canada (tier-one asset locations), there are only 17 mines producing over 300,000 ounces each year. Production has declined in the regions due to a lack of discoveries over the past few decades. Since production commenced, averaging 300,000 ounces per year, Pogo has produced over 3.8 million ounces at an average mine grade of 13.6 grams per tonne.

It produced 271,000 ounces with a breakeven cost of US$882 per ounce last year.

The bottom line: Pogo is a world-class project, which should deliver significant cash flow for Northern Star Resources shareholders ― especially at higher gold prices. There are also significant opportunities to grow the project, production profile, resource and mine life over time. That should ensure the mine produces around 300,000 ounces per annum in the future.

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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