NST’s quarterly numbers in January weren’t as well received as EVN’s, and the ~$20bn miner has struggled to maintain upside momentum. However, the miner is well-positioned in the medium term if gold continues to advance, assuming its purchase of De Grey Mining (DEG) for $5bn goes ahead. The NST takeover proposal, which shareholders vote on April 16, will give De Grey investors 0.119 new Northern Star stock for each share. We believe the deal will go ahead with the De Grey board unanimously recommending it, but some analysts believe that NST has paid top dollar for DEG. The following 10% move for the miner feels like a coin toss, and we prefer others in the sector.
- We can see NST testing new highs if gold can punch above $US3,000/oz, but the risk/reward isn’t exciting at current levels.
MM is cautiously bullish about NST in the short term.
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