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Northern Star upbeat on growth, returns

AAP logoAAP 21/08/2016 Peter Trute

Mid-cap gold miner Northern Star Resources has outlined a program of organic growth to lift gold production in the wake of a 65 per cent jump in full-year profit that was helped by higher gold prices and cost savings.

Northern Star has reported a net profit of $151.4 million for the year to June 30, up from $91.9 million a year earlier and confirming estimates given earlier in August.

Revenue rose five per cent to $887.4 million.

Northern Star managing director Bill Beament said the company was focusing on four key production centres following its agreement to sell its Plutonic mine to Canada's Billabong Gold earlier in August.

The Plutonic sale cut estimated output for 2018 to around 600,000 ounces, from about 700,000 previously.

Mr Beament said the company was looking to maximise financial returns rather than headline production numbers - evidenced by the three cent special dividend to be paid from proceeds of the Plutonic disposal.

"We have one of the lowest cost bases of any major gold producer in the world," Mr Beament said in a statement on Monday.

"We have a pipeline of growth, no debt and substantial cashflow underpinned by some of the best margins in the gold mining industry."

Northern Star now plans to invest $60 million on drilling to develop existing discoveries in 2016/17 and has committed to $70 million in capital expenditure to lift production.

RBC Capital Markets analyst Paul Hissey said in a research note that the result was softer than RBC estimates "arising from what appears to be higher costs".

Mr Hissey pointed to $30.9 million in corporate costs, above RBC's estimate of $20 million, as "a partial source of the miss".

Western Australia-based Northern Star will lift its fully-franked final dividend to four cents, from three cents.

Northern Star shares closed down 13 cents or 2.8 per cent at $4.58 on Monday.

GOLDEN RESULT FOR NORTHERN STAR

* Net profit after tax up 65 per cent to $151.4m

* Revenue up five per cent to $887.4m

* Final dividend four cents, fully franked. Full-year dividend seven cents.

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