There can be no denying that gold miner Northern Star Resources Ltd (ASX: NST) has been a phenomenal performer in the last 12 months.
The screaming headline of the company's recent half year result announcement – all in capitals – didn't hold back:
"NORTHERN STAR DOUBLES INTERIM DIVIDEND AND SHAREHOLDER RETURNS AS NET PROFIT SOARS 573% TO A$51M"
And the company has every reason to be shouting from the roof tops. Northern Star has achieved what other ASX-listed gold miners can only dream of; buying up cut priced assets from a desperate seller and becoming the second largest ASX-listed gold miner in the country.
On top of all that, Northern Star has consistently been among the lowest cost gold producers around with an aim to keep it that way throughout 2015. So is the company's run complete, or is there more to come?
Operationally, Northern Star's low cost production will continue to maximise margins against the volatile gold price in the short term. Longer term the new acquisitions set the company up for a strong base of gold reserves (6.7 million ounces), which at production of 600,000 ounces per year will keep Northern Star going for 11.2 years.
This is short compared to Newcrest Mining Limited's (ASX: NCM) reserve life of just over 31 years. However Northern Star doesn't have the big debt challenge faced by Newcrest Mining, which has struggled to reduce its gearing position in the last 12 months due to the falling Aussie dollar.
This frees up Northern Star to reinvest cash into growth, like the recently announced acquisition of Hermes gold deposit in Western Australia, and pay out dividends to shareholders – a rare double for a gold miner at the moment.
Time to buy?
In my view much of Northern Star's success has already been priced into the company's share price. With a price-to-earnings ratio of 21, Northern Star is fully valued relative to other gold miners, as well as fast growing, non-commodity companies like G8 Education Ltd (ASX: GEM).
