Northern Star flags production challenges as operations focus on long-term performance

About Northern Star Resources Limited

Northern Star Resources Limited (ASX: NST) is one of Australia’s largest gold producers, operating a portfolio of Tier-1 gold assets across Western Australia and Alaska. The company’s major operations include the Kalgoorlie Consolidated Gold Mines (KCGM) Super Pit, the Jundee underground mine, and the Pogo gold mine in Alaska.

Northern Star has built a reputation for disciplined operational management and strategic consolidation within the Australian gold sector. The company’s growth strategy focuses on improving productivity at existing assets while investing in infrastructure expansions designed to enhance long-term production capacity and reduce operating costs.

Operational performance and production outlook

Northern Star’s latest operational update reflects several short-term operational pressures affecting performance during the March quarter to date.

Total gold sales across the Group during January and February reached 220,000 ounces, impacted by weaker-than-expected milling performance at the KCGM operation and reduced mining productivity across several operating areas.

The company indicated that achieving the lower end of its previously announced FY2026 production guidance may prove challenging given the operational performance observed in the first months of the calendar year. However, management continues to expect total production for FY2026 to exceed 1.50 million ounces, subject largely to milling throughput at the KCGM processing plant.

The company noted that mill performance at KCGM remains variable as operations continue to rely on existing processing infrastructure while the new expanded mill facility is under construction.

KCGM expansion project progressing

A key element of Northern Star’s long-term strategy is the KCGM Mill Expansion Project, which is designed to significantly increase processing capacity and unlock additional value from the Kalgoorlie Super Pit.

The project continues to progress well and remains on schedule for commissioning in early FY2027. To ensure the project timeline remains intact, Northern Star has increased labour resources on site, with approximately 800 contractors working on the plant construction and an additional 400 contractors engaged in enabling works.

Mining operations and stockpile growth

Despite challenges in processing performance, mining activity at KCGM has continued to progress well.

Mining volumes from both the open pit and underground operations have remained broadly in line with the December quarter, supporting the accumulation of significant ore stockpiles. At the end of February, Northern Star had built approximately 100,000 ounces of high-grade ore stockpiles, with an average grade of 1.6 grams per tonne.

This material is expected to be processed once the expanded mill becomes operational, replacing lower-grade ore and supporting improved production performance in FY2027.

Open pit mining productivity continues to track toward annual guidance targets of 80–90 million tonnes of material movement per year, while underground production is targeting approximately 3 million tonnes per annum.

Operational review at Jundee

Northern Star has also commenced an operational review of the Jundee gold mine aimed at improving operational efficiency and reducing production costs.

The review is focused on prioritising higher-margin ounces and improving the overall profitability of the operation. As part of the process, the company is evaluating opportunities to redeploy surplus personnel and equipment to higher-margin operations across its broader portfolio.

Management expects these operational adjustments to be implemented during the June quarter as the company continues to optimise resource allocation across its assets.

Strategic focus on long-term value

Northern Star’s management emphasised that maintaining long-term operational stability and protecting the commissioning timeline for the KCGM expansion project remains a priority.

Managing Director and CEO Stuart Tonkin noted that the company’s immediate focus is not solely on meeting short-term production targets but rather on ensuring the business is well positioned to achieve its full operational potential from the beginning of FY2027.

This approach reflects the company’s broader strategy of prioritising sustainable operational performance and long-term value creation over short-term production outcomes.

Medium-term outlook

Northern Star is currently preparing updated medium-term production, cost and capital forecasts, which it intends to release to the market later in 2026.

The company said the initiative reflects investor feedback requesting greater transparency regarding the medium-term outlook for the company’s asset base.

These forecasts are expected to provide a clearer understanding of how the company’s major growth initiatives, particularly the KCGM mill expansion, will influence future production capacity and cost structures.

Outlook

While Northern Star continues to face short-term operational challenges across parts of its portfolio, the company remains confident in the long-term outlook for its operations.

The commissioning of the expanded KCGM processing plant in FY2027 is expected to represent a major inflection point for the company, unlocking higher processing throughput and improving operational efficiency across one of Australia’s largest gold mining operations.

In the meantime, management is prioritising disciplined operational management, cost optimisation and the strategic allocation of resources across its mining portfolio.