Northern Star Stuart Tonkin’s $2.4m direct stake selldown

Shares in the gold miner climb after strong gold prices helped chief executive Stuart Tonkin cash out his entire direct stake to meet his tax liability.

Gold miner Northern Star’s managing director Stuart Tonkin has sold his direct stake in the multibillion dollar business as higher inflation and rising interest rates keep high prices for the precious metal on the boil.

The sale of his 223,112 shares last week, on December 15 and December 16, netted the leader of the $12.4bn business a return of $2.4m at an average price of $10.74 per share.

Global banks have latched on to the safe-haven asset through the pandemic years and as a potential worldwide economic slowdown looms, with the price of the yellow metal surging 27 per cent from around $2100 per ounce in late 2019 to $2670 per ounce currently in Australian dollar terms.

Northern Star’s share price is up nearly 5 per cent to $11.22 just before noon on Monday - a gain of more than 16 per cent since mid-December 2019.

For comparison, the S&P/ASX All Ordinaries Gold index – a benchmark for Australian gold companies – has mirrored that 10.5 per cent gain since mid-December 2019, while the ASX 200 index is up just over 6 per cent over the same period.

Northern Star’s aftermarket change of director’s notice shows Mr Tonkin still holds an indirect stake of 1.2 million shares, with the holdings via his super entity getting a 110,000 shares boost ahead of the sale.

“The sale was undertaken in order to meet Mr Tonkin’s estimated tax liability,” the group said.

The selldown comes two months after Mr Tonkin said flagged further tailwinds for gold as he detailed the higher hedging contracts on offer for miners – much higher than spot prices at close to $3000 an ounce.

Northern Star, which has three major gold mining operations – two in WA and one in North America – has a policy of hedging about 20 per cent of its production for the next three years. The Australian gold major said in its annual financial statements, released in August, it would deliver 439,000 ounces of gold at an average $2411 an ounce in the current period.

But Northern Star had not been tempted to lock in more gold at elevated prices on offer, but would stick with its current hedging policies, given inflation is pushing up the company’s production costs, Mr Tonkin had said at the time.

In November, chairman Michael Chaney reiterated that message and expressed frustration at the way its share price – and that of other gold companies – “seems to be driven by short-term emotion rather than by fundamentals”.

“For example, during the last eighteen months when the actual gold price in Australian dollars has been consistently in the mid-A$2,000/ounce, our share price has fluctuated by as much as 40 per cent,” Mr Chaney said.

“This, I think, highlights the need for the board and management to be constantly focused on the long term and not to be too distracted by short term fluctuations or demands. It is providing superior long term returns to shareholders that drives us.”