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Northern Star (NST) - A Solid FY17 Result

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Northern Star Resources (NST) reported double digit growth for their FY17 results with NPAT of $215.3m (+42% y-o-y), EPS up 42% and a final dividend of 6cps (+50% y-o-y). FY17 gold sales came in at 527koz @ $1,675/oz (vs production of 515koz @ AISC $1,013/oz) generating EBITDA margins of 52%. FY18 production is guided at 525-575koz at an AISC of $1000-1050/oz moving to >600kozpa in FY19 as infrastructure reaches maturity at Jundee and Kalgoorlie Operations to support additional throughput. NST announced a shift in its dividend policy which will see it pay out 6% of its revenue and maintain a minimum cash balance of $300m which is earmarked for working capital, opportunistic M&A and organic growth. This is a solid result and we expect to see continued organic growth through exploration success in FY18. NST remains our preferred pick in the gold space. BUY, TP $5.25ps.

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