Northern Star Resources Q2 Earnings Call Highlights

Northern Star Resources (ASX:NST) management used its latest quarterly update call to outline the operational disruptions that weighed on December-quarter results, provide revised FY26 guidance, and detail capital spending priorities across the portfolio. Managing Director and CEO Stuart Tonkin was joined by Chief Financial Officer Ryan Gurner and Chief Operating Officer Simon Jessop.

December quarter: softer output tied to one-off events

Tonkin said gold sold in the December quarter totaled 348,000 ounces at an all-in sustaining cost (AISC) of $2,937 per ounce. He attributed the softer performance to “a number of one-off operational events across our assets,” which also drove a revision to the company’s FY26 production and cost outlook.

Jessop provided additional detail by production center, starting with Kalgoorlie. He said the Kalgoorlie production center delivered a lower-than-expected quarter due mainly to:

• South Kalgoorlie: a previously announced partial suspension of mining while a new escapeway was mined and installed over nine weeks. Jessop said mining returned to normal operations from mid-December.
• KCGM processing: mill throughput underperformed throughout the quarter, with the primary crusher failing in December. Jessop said the crushing circuit has performed in line with normal expectations since Jan. 5, noting more than 700,000 tonnes were crushed in 20 days versus 600,000 tonnes in the full month of December.

Despite processing constraints, Jessop said KCGM mining performance was strong, including a record 207,000 ounces mined in the quarter under Northern Star’s ownership. He also said KCGM ended the quarter with 1.3 million tonnes at 1.9 grams per tonne and 81,000 ounces of high-grade ore on the ROM pad due to the throughput issues.

At Yandal, Jessop said both Jundee and Thunderbox experienced a “challenging quarter and first half.” At Jundee, localized structural failure in the crushing circuit required tunnel excavation and rebuilding; he said ROM pad loaders are feeding the bin again, with full completion on track for mid-February. Jessop also said the Jundee airstrip is less than two weeks from its first flight and is expected to reduce rain interruptions and generate flight savings.

Thunderbox faced reduced throughput due to tank issues, which also lowered recovery by 5%, as well as challenges at Aurelia, where Jessop said the resource has not performed as modeled in high-grade areas. He said the company reduced the mining fleet from 17 trucks to 11 to improve mining practices and efficiencies, and that Aurelia’s strip ratio reduces from here. Jessop described Aurelia as having an estimated 21-month life expected to generate 215,000 ounces at 1.4 grams per tonne. He added that Bannockburn open pit mining has ramped up, with first ore being stockpiled ahead of milling in the second half as another ore source close to the Thunderbox mill.

In Alaska at Pogo, Jessop said lower gold sales were impacted by lower head grade (by about 0.5–1 gram per tonne) tied to stope dilution and ore loss, as well as about 30,000 tonnes less ore due to East Deeps fan constraints in scheduled high-grade areas. He also cited about three days lost in December due to extremely cold temperatures. However, he said January showed improving mine grades above 6 grams per tonne, and processing performance in the quarter was “very good,” with availability averaging 92% year to date and recovery at 86%—5% higher than expected. Development improved to 5.2 kilometers in the quarter.

Revised FY26 guidance and expectations for a stronger second half

Tonkin said the company’s revised FY26 outlook is for 1.6–1.7 million ounces of gold sold at AISC of $2,600–$2,800 per ounce. He said the disruption events are now behind the company and the team is focused on productivity improvements and cost discipline to deliver a stronger second half.

Jessop said operations were in a “much stronger position” entering the second half, citing KCGM and South Kalgoorlie returning to normal, Jundee issues expected to be resolved during the current quarter, improved conditions at Thunderbox, and improved head grades at Pogo continuing into January.

Capital spending: KCGM mill expansion, tailings, and Hemi

Tonkin said overall operational growth capital guidance remains unchanged at $1.14–$1.2 billion, while providing updated detail on key projects.

At KCGM, FY26 growth capital expenditure for the mill expansion is now expected to be $640–$660 million. Tonkin said this reflects targeted increases in labor to ensure commissioning in early FY27. In the Q&A, he described the labor increase as “targeted and deliberate,” lifting headcount to more than 800 people to maintain schedule, and noted an uplift of about AUD 110 million this year associated with that approach.

Jessop said the project remained on time for an early FY27 ramp-up, and that the workforce had been maintained through the Christmas-New Year period. In response to questions about timing, Tonkin said the company still expects the mill to be running in July, describing the remaining work as electrical, pipework, testing, and final fit-out steps prior to energizing and commissioning.

Tonkin also said KCGM tailings dam activity is ahead of schedule. FY26 spend is now expected to be $240–$260 million and FY27 forecast spend is expected to be lighter at $100–$120 million, representing about a 10% reduced cost for the overall tailings dam project.

At the Hemi project, Tonkin said forecast spend is $165–$175 million, reflecting optimization of engineering and design work. In the Q&A, management said permitting remains in process, including EPA approvals, while work continues in parallel on water trials and dewatering testing and stakeholder engagement. Tonkin said the company is working toward being in a position by the end of the calendar year to put numbers together for a final investment decision, and described ongoing optimization efforts, including considerations around common equipment and spares with KCGM and potential changes to mill sizing to align more closely with the Fimiston expansion design.

Balance sheet, cash flow, hedging, and tax

Gurner said Northern Star remained in a net cash position of AUD 293 million at Dec. 31, with AUD 1.18 billion of cash and bullion. He said first-half FY26 cash earnings were estimated at AUD 1.06–AUD 1.11 billion, reiterating the company’s dividend policy of paying 20%–30% of cash earnings.

Gurner said all three production centers generated positive net mine cash flow in the quarter, with capital and exploration fully funded. The company recorded AUD 738 million of operating cash flow during the quarter, which included an $18 million semi-annual coupon payment on notes and about AUD 30 million in annual insurance premiums.

Income tax paid totaled AUD 370 million in the quarter, bringing first-half payments to AUD 437 million, which Gurner said was lower than first-half cash tax guidance. With the updated second-half production outlook, he said the company lowered second-half group cash tax forecast to $230–$270 million. He also said there was no change to estimates for landholder duties related to the De Grey and Saracen transactions.

On hedging, Gurner said the company delivered 158,000 ounces into hedges during the quarter. At Dec. 31, total hedge commitments were 1.1 million ounces at an average price “just over” $3,300 per ounce. Tonkin said that as the hedge book decreases, the company’s growing exposure to spot gold, along with increasing production, positions it for stronger cash flows, noting gold prices exceeding $7,000 per ounce.

About Northern Star Resources (ASX:NST)

Northern Star Resources Limited engages in the exploration, development, mining, and processing of gold deposits. It also sells refined gold. It operates in Western Australia, the Northern Territory, and Alaska. The company was incorporated in 2000 and is headquartered in Subiaco, Australia.