Northern Star Resources (ASX:NST) said it has revised down full-year production guidance after a “soft” December quarter that was impacted by several isolated operational issues across its portfolio, while management reiterated confidence in the underlying asset base and pointed to upcoming growth catalysts.
Guidance lowered after December quarter disruptions
Managing Director and CEO Stuart Tonkin said the company has reduced annual production guidance to 1.6–1.7 million ounces, down from 1.7–1.85 million ounces, following a number of operational events late in the December quarter. Tonkin said the issues have “largely now been rectified,” positioning the group to deliver second-half production of 871,000–971,000 ounces.
Kalgoorlie: South Kalgoorlie slip and KCGM crusher failures hit throughput
Chief Operating Officer Simon Jessop said the Kalgoorlie Production Centre delivered a lower-than-expected quarter due to two main issues.
- South Kalgoorlie (SKO): Following significant rainfall in October, a pit wall slip impeded an escape way, leading to a partial suspension of mining. A new escape way was mined and installed over nine weeks, with normal mining resuming around mid-December. Jessop said SKO has returned to normal operations and the sales impact was 10,000 ounces, consistent with prior disclosure.
- KCGM processing: The mill underperformed during the quarter as Fimiston primary crusher faults impacted plant stability. Jessop said this drove a shortfall of around 650,000 tonnes of throughput in the December quarter. A major Q3 shutdown was brought forward into Q2, lasting over a week, but the crusher failed again 12 hours later, resulting in another two weeks of downtime over the Christmas period until recommissioning started on 5 January. He noted the previous replacement was in February 2021, with an earlier failure in August 2017, and said sourcing specialist labor over the Christmas break extended repair time.
Despite the processing constraints, Jessop said KCGM mining performance was similar to the first quarter. Open pit material movement totaled 22 million tonnes in the December quarter and 45 million tonnes in the first half, placing it at the top of the annual guidance range of 80–90 million tonnes. He said the open pit mined approximately 150,000 ounces in Q2 (unreconciled), including 110,000 ounces from Golden Pike.
KCGM’s underground operation developed 8.6 kilometers during the quarter and mined 780,000 tonnes (annualized to ~3 million tonnes per annum), producing approximately 42,000 ounces (unreconciled). Total mining achieved about 190,000 ounces for Q2, and with processing constrained, the quarter ended with 1.1 million tonnes at 1.9 g/t (about 70,000 ounces) on the ROM pad.
Jessop also said the KCGM mill expansion continued over the Christmas period and remains on time for an early FY27 ramp-up, with a workforce expected to increase to more than 800 personnel in January.
Yandal: Jundee repairs ongoing; Thunderbox faces tank and grade issues
At the Yandal Production Centre, Jessop said both Jundee and Thunderbox experienced a challenging quarter and first half.
At Jundee, the previously announced localized structural failure in the crushing circuit took longer to repair than anticipated. Jessop said the Coarse Ore Stockpile Tunnel has been excavated, all materials are on site, and the quarter’s impact was around 170,000 tonnes of processing (at 40–50 tonnes per hour), or roughly 15,000 ounces. Normal crushing operations are expected to be restored around mid-February. He also said an airstrip upgrade that was already underway compounded the quarter’s results by reducing operational time; the airstrip project is expected to be completed in late January.
At Thunderbox, Jessop said reduced throughput due to tank issues also impacted recovery by 5%, while mined grade from Aurelia and haulage of high-grade ore to the mill was lower than expected. He said all tanks were back in operation at quarter end, with further rectifications planned for the second half that will cycle through seven tanks. On Aurelia, Jessop said the resource “is not performing as modeled” in high-grade areas, prompting a reduction in the mining fleet from 17 trucks to 11. He said Aurelia has an estimated life of about 21 months and is forecast to generate 215,000 ounces at 1.4 g/t. Jessop added that open pit mining at Bannockburn has ramped up, with first ore stockpiled ahead of milling in the second half.
Pogo: lower head grade offset by strong processing metrics
Jessop said Pogo recorded lower gold sales due to a lower head grade of about 0.5–1 g/t, attributed to stope dilution and ore loss. Ore volume was also about 30,000 tonnes lower due to constraints on scheduled high-grade ore in East Deeps and approximately three days of lost time in December due to extreme cold below -40°C. He said processing performance was strong, with availability averaging 92% year to date and recovery at 85.8% in the quarter, about 5% higher than expected. Development improved to 5.2 kilometers for the quarter, exceeding the 1,500-meter monthly target.
Financial position and hedging commitments
Chief Financial Officer Ryan Gurner said the company entered the second half of FY26 in a strong financial position. As of 31 December, preliminary cash and bullion holdings were expected to be about AUD 1.17 billion, with the company’s AUD 1.5 billion credit facilities undrawn, resulting in total liquidity of roughly AUD 2.7 billion.
Gurner said the company expects negative free cash flow in Q2, driven by the softer production outcome and a AUD 250 million tax balancing payment for FY25 made during the quarter, alongside annual insurance premiums and a semi-annual coupon payment on notes. He added that despite lower-than-planned sales, the company delivered its hedging commitments, with 330,000 ounces committed for the second half of FY26, which he said is within forecast production.
On costs, Gurner said Q2 all-in sustaining cost per ounce will be higher than Q1 due to lower production and higher sustaining capital during the quarter, while year-to-date sustaining capital spend is tracking to plan. Management said updated cost guidance would be addressed at the upcoming results call after quarterly numbers are finalized.
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.
