What's boosting the Northern Star share price on Tuesday?

As gold curls upwards, Northern Star has seen its share price rocket.

| More on:
Rising gold share price represented by a green arrow on piles of gold block.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Key points

  • Northern Star confirmed another asset sale today 
  • It will be unloading its Coyota and Paulsens Gold operations to Black Cat Syndicate 
  • In the last 12 months, the Northern Star share price has held gains and is up less than 1% 

Shares in Northern Star Resources Ltd (ASX: NST) are rangebound today and now trade 35 basis points higher at $11.48 apiece.

After surging hard in April, the Northern Star share price has thrust from a low of $10.15 to rest just shy of 52-week highs.

As the price of gold manages to curl upwards, Northern Star has seen its share price rocket north in quite a synchronised fashion.

This relationship has clipped a 30% gain for the Northern Star share price in the past 3 months of trade.

TradingView Chart

What was announced today?

Northern Star posted an announcement from Black Cat Syndicate Ltd (ASX: BC8) that the latter has entered into binding agreements to acquire the company's Coyota and Paulsens Gold operations.

Under the terms, it is proposed Black Cat will pay a cash consideration of $14.5 million at completion, "with a further $15.0 million secured and payable on or by 30 June 2023."

To fund the acquisition, Black Cat is pleased to announce that firm commitments have been received to raise $35 million by way of a placement at an issue price of [55 cents] $0.55 per share to institutional and sophisticated investors.

Shares in Black Cat Syndicate are down 15% today, bringing losses to 23% for the last year.

Bloomberg Intelligence analyst Yi Zhu recently commented that Northern Star's portfolio restructuring efforts could be a net positive, in a research note.

"Northern Star aims for gold production of 2 million ounces by calendar 2026, up 425,000 ounces or 27% from 2021 following asset restructuring over the past 12 months," she wrote.

Noteworthy is the Saracen Minerals transaction of February 2021, which has "estimated to have driven up the company's net present value (NPV) by $1.5-$2.0 billion".

Furthermore, "[t]he divestiture [of its Mungari assets] strengthened Northern Star's balance sheet by A$400 million," adding a question mark over what could eventuate from Black Cat's purchase, announced today.

"Northern Star will likely benefit from higher sustained earnings over the long term, as output is expected to climb 27% from the 1.6 million ounces (moz) reported in fiscal 2021 ended June to a target of 2.0 moz by 2026," Zhu added.

In the last 12 months, the Northern Star share price has held gains and is up less than 1%. This year to date however, it has gained 22% after a 7% gain.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing end to a disappointing week for investors this Friday.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Betr, Centuria Capital, GR Engineering, and Mach7 shares are pushing higher

These shares are having a good finish to the week. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX gave up an afternoon lead to close lower today.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Clarity Pharmaceuticals, Kelsian, Life360, and Syrah shares are rising today

These shares are pushing higher on Thursday. But why?

Read more »

Man smiling on top of rocks with mountains in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors were in a nervous mood today.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Share Gainers

Why Beach Energy, Boss Energy, Cochlear, and Light & Wonder shares are pushing higher

These shares are having a good time on hump day. But why?

Read more »

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing Tuesday session for ASX investors today.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Thinking of selling your CBA shares? This expert says you should hold on

CBA shares are up by about 80% since November 2023.

Read more »