Earnings call transcript: Northern Star reports record cash flow in Q4 2025

Northern Star Resources Ltd (NST), with a market capitalization of $15.7 billion, has reported its financial results for Q4 2025, demonstrating strong operational performance and strategic advancements. The company achieved record annual underlying free cash flow and maintained a robust net cash position. Despite these achievements, the company’s stock experienced a significant decline, dropping 34.07% to a last close value of 14.12. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment, with an impressive overall Financial Health score of 3.21 (rated as GREAT).

Key Takeaways

• Northern Star sold 444,000 ounces of gold in June, contributing to a full-year production of 1,634,000 ounces.
• The company reported a net mine cash flow of AUD 1,189 million.
• Northern Star’s stock fell sharply, reflecting market concerns despite operational successes.
• Inflationary pressures have increased costs, impacting the company’s all-in sustaining cost.

Company Performance

Northern Star Resources showcased a strong operational performance in Q4 2025, with significant achievements in production and cash flow. The company sold 444,000 ounces of gold in June, culminating in a full-year production of 1,634,000 ounces. Operational efficiency was highlighted by record mill performances at Pogo and increased underground mining volumes at KCGM. The company’s robust performance is reflected in its impressive 25.11% revenue growth and healthy current ratio of 2.03. InvestingPro subscribers can access detailed financial health metrics and exclusive ProTips about Northern Star’s operational efficiency in the comprehensive Pro Research Report, one of 1,400+ available on the platform.

Financial Highlights

• Gold production: 1,634,000 ounces for the full year
• All-in sustaining cost: AUD 2,163 per ounce
• Net mine cash flow: AUD 1,189 million
• Cash and bullion: AUD 1,900 million
• Net cash position: AUD 1 billion

Outlook & Guidance

Looking ahead, Northern Star has provided guidance for FY 2026, projecting gold sales between 1.7 to 1.85 million ounces. The company expects all-in sustaining costs to range from AUD 2,300 to AUD 2,700 per ounce. The KCGM operation is anticipated to deliver 550,000 to 600,000 ounces. Operational growth capital is guided at a midpoint of AUD 1,170 million, reflecting the company’s commitment to strategic investments. With a beta of 0.64, the stock shows lower volatility than the market, while analyst consensus suggests potential upside. InvestingPro members can access detailed analyst forecasts and exclusive insights about Northern Star’s growth trajectory.

Executive Commentary

Stu Tonkin, CEO of Northern Star, emphasized the company’s focus on strategic investments and operational efficiency. "We’re not out here running processes and putting things for shop. We’re investing in our projects, and they’re contributing well," he stated. Tonkin also highlighted the company’s approach to cost management, stating, "We prefer to have the lowest cost thermal generation that we can have."

Risks and Challenges

• Inflationary pressures: Estimated at 5%, increasing cost per ounce by approximately $100.
• Sustaining capital: Increased to $750 million, impacting financial flexibility.
• Market volatility: The significant stock price decline reflects investor concerns despite operational achievements.
• Energy costs: Investments in power infrastructure are critical to managing future costs.
• Portfolio rationalization: Potential changes could impact strategic focus.

Northern Star Resources continues to navigate a challenging market environment, balancing operational successes with strategic investments to secure its position as a leading global gold producer.

Full transcript - Northern Star Resources CFD (NST) Q4 2025:

Stu Tonkin, CEO, Northern Star Resources: Good morning, and thank you for joining us today. With me on the call is Chief Financial Officer Ryan Gurner and our Chief Operating Officer Simon Jessup. As we confirmed this morning, for the June, we sold 444,000 ounces of gold at an all in sustaining cost of Australian dollars $2,197 a per ounce. This enabled us to meet our revised production and cost guidance with FY ’25 delivering 1,634,000 ounces at Australian dollars $2,163 per ounce all in sustaining cost. I’m very proud of the team for safely delivering a record in terms of gold sold for the full year, which has driven record annual underlying free cash flow.

I also want to acknowledge that it’s been a challenging twelve month period as we have faced productivity and cost headwinds, particularly at KCGM, our largest asset. This led us to confirm that we will not reach our ambitious 2,000,000 ounce per annum group target in FY twenty six, primarily because KCGM is not yet able to deliver the 650,000 ounce a year run rate. But let me emphasize, with a mine life exceeding twenty years, KCGM remains a cornerstone of our medium and long term value proposition. And this is why we continue to invest in the potential of this asset, which in turn will drive a positive step change in free cash flow generation for the company for many years to come. Notwithstanding the challenges of the past year, record gold sold combined with an elevated gold price resulted in the generation of strong net mine cash flow of Australian dollars $1,189,000,000 for the year.

All three production centers contributed positive net mine cash flow, with Yandle and Pogo delivering record cash flows for FY ’25. Our investment grade balance sheet remains strong and in a net cash position, and I’m pleased that we were able to complete our on market share buyback, which has delivered significant returns for our shareholders at an average price of just over $11 per share. Meanwhile, our KCGM mill expansion project is well advanced and tracking to plan, and this has allowed the company to formally revise its hedging policy with a decision to wind down our hedge book because of our confidence in our outlook and our balance sheet. I also would like to mention the successful acquisition of De Grey during the quarter. Since then, we have welcomed the team into our group and continue to advance the HEMI development project.

Now let me touch on FY twenty six guidance that we released to the market earlier this month. The company is forecast to deliver 1.7 to 1,850,000 ounces gold sold at an all in sustaining cost of Australian dollars 2,300 to $2,700 an ounce. We continue to advance major growth projects to achieve our goal of being a long life, high margin, returns focused global gold producer. Our CFO, Ryan Goerner, will elaborate on the increase in spend across our business shortly. But first, I’d now like to hand over to Simon Jessup, our chief operating officer, to discuss our operational highlights.

Simon Jessup, Chief Operating Officer, Northern Star Resources: Thank you, Stu, and good morning. As Stu mentioned, FY ’25 has been a busy but challenging year. Safely improving productivity remains our key focus across all three of our production centers. Pleasingly, Pogo delivered a strong June to exceed the full year guidance. At Yandall, the June was also strong to enable us to meet guidance.

The Kalgoorlie production center proved more challenging and missed guidance because of KCGM mining efficiency was below expectations and access to the high grade Golden Pike North area, Worcester Lake. At Kalgoorlie, total gold sold for the year was 832,000 ounces, which included 419,000 ounces at Casey Gem. In the June, Casey Gem delivered a 118,000 ounces gold sold. During the quarter, open pit mine grades was impacted by ore source variation despite an increase in Golden Pike North contribution. Total open pit material movement was 22,700,000 tonnes, up 48% compared to the March, as productive mining commenced restoring to business as usual.

Total material movement for FY ’25 was 74,000,000 tonnes versus a planned of 80 to 90,000,000 tonnes. June underground ore mined volumes were 871,000 tonnes, up 78% compared to the March, with mine grades also increasing. Northern Star Mining Services, NSMS, increased development meters to 7.5 kilometers for the quarter and commenced development at the newly established Drysdale Portal. KCGM mill grades were lower than planned due to open pit ore sourcing. What really excited the team during the quarter was the commencement of the new Drysdale Portal.

Drysdale is 400 meters below the surface and allows for future drilling and a lower link drive to the Finiston underground work area. This platform will commence the journey of delineating the many mineralized systems at depth and is exciting for KCGM’s long term growth. Looking ahead to FY ’26, KCGM is forecasted to to deliver 550 to 600,000 ounces. Underground mine volumes are planned to be around 3,000,000 tonnes, while open pit mining productivity is forecast to increase throughout the year as mining in Golden Pike North returns to one minuteing horizon by the second half of FY twenty six. Mill grades are expected to stabilise in the September and then lift for the remainder of the year.

Just briefly, Stu touched on the KCGM mill expansion project, which remains on track. We remain very pleased with the on ground construction activities as the project advanced to structural and mechanical installation. Let me finish off with the Kalgoorlie Production Centre by highlighting that Karasu Dam and Kalgoorlie operations generated net mine cash flow of $657,000,000 for FY 2025, a fantastic performance. Turning to our Yandall production center, the highlight for the quarter, in fact, the year, was the milling performance at both Jundee and Thunderbox. This enabled Yandall to meet FY 2025 guidance, although as we experienced across our entire portfolio, the cost environment remains challenging.

At Jundee, record mill tonnes were achieved to deliver an annualized run rate of 3,400,000 tonnes per annum above nameplate capacity. Griffin continued to ramp up with the transition into stoping planned in the second half of FY twenty six. Pleasingly, development advanced increased to a new record of 8.5 kilometers for the quarter. At Thunderbox, strong mill performance achieved a record 6,300,000 tonne per annum run rate during the quarter, bringing total of f y 25 mill throughput to nameplate at 6,000,000 tonnes. The Wona underground mine continued to increase volumes as development with Wona jumbo averaged 603 meters per month for the quarter.

At Bannockburn, the team continued to ramp up open pit activities in preparation for the first ore feed in the second half of FY twenty six. Finally, turning our attention to Pogo. Pogo has had an excellent quarter to finish off an excellent year, especially h two. For the quarter, the Pogo mill delivered a record performance on multiple fronts, monthly throughput, quarterly throughput, availability, and utilization, operating at an annualized run rate of 1,600,000 tonnes per annum. Higher grades and increased recovery also contributed to Pogo delivering 85,000 ounces of gold sold at a US dollar $11.54 dollars an ounce.

During the quarter, the development lifted 12% quarter on quarter to an average of sixteen fifty meters per month. Late in the quarter, we started work on two new portals to access and develop central veins and good pasture deposits. The resource for these areas is 5,000,000 tonnes at 10 grams for 1,500,000 ounces, with only 50,000 ounces in reserve. And hence, this is a critical long term strategic development. The mill also achieved a new quarterly record of 395,000 tonnes of throughput as the availability was 97% for the quarter.

It is worth noting that for the full FY ’25, Pogo sold 283,000 ounces and generated Australian $463,000,000 of net mine cash flow. In US dollar terms, this corresponds to US 301,000,000, which is greater than the 260,000,000 purchase price paid for back in 02/2018. Let me finish by reiterating group guidance production guidance we provided to the market earlier this month. We guided FY ’26 gold sold to be in the range of 1.7 to 1,850,000 ounces, including September production of approximately 400,000 ounces at the high end of the all in sustaining cost guidance range, as planned mill shutdowns will be carried out across all three production centers this quarter. The June is forecast to be the strongest for the year due to access to increased volumes of high grade ore sources as they become available.

I would now like to pass over to Brian, our chief financial officer, to discuss the financials.

Ryan Goerner, Chief Financial Officer, Northern Star Resources: Thanks, Simon. Good morning, everyone. As demonstrated in today’s results, the company is in a great financial position as we enter FY ’26. Our balance sheet remains strong with cash and bullion of 1,900,000,000.0, and we remain in a net cash position of 1,000,000,000 at thirty June. This includes the 663,000,000 of cash acquired following the acquisition of De Grey.

The company has generated record full year cash earnings. We expect the final figure to be in the range of 2.8 to 2,950,000,000.00, a reminder that our dividend policy is based on 20 to 30% of cash earnings. Importantly, as Stu has already mentioned, all production centres delivered strong net mine cash flows, which totaled $1.1200000000.0 for the full year. As Simon mentioned, Pogo, a standout delivering a record contribution. The company continues to deliver on its key growth projects across the portfolio.

Growth capital was 40,000,000 above the full year group forecast of 1,630,000,000.00. The additional spend related to 21,000,000 for previously committed long lead time items and project development progress at HEMI and 22,000,000 at the KCGM mill expansion, which remains on budget. The company’s committed hedge position at thirty June is 1,400,000 ounces at an average price of 3,286 per ounce, with no further commitments added during the quarter. Let me touch on the company’s cash, bullion, and investments movements for the quarter. The company recorded 922,000,000 of operating cash flow, which included 37,000,000 advancing the HEMI project, which included the 21 I referenced earlier, and 80,000,000 in corporate tax payments.

Quarterly free cash generation was 211,000,000, bringing the full year underlying free cash flow to 536,000,000. Now turning to our FY ’27 outlook. As Stu mentioned, we expect to deliver 1.7 to 1,500,000 ounces at an all in sustaining cost of 2,300 to 2,700 Australian per ounce. We forecast cost per ounce to improve throughout the year. The higher cost base in FY ’26 reflects inflationary pressures of 5%, corresponding to a year on year increase of approximately a $100 per ounce, Higher gold price related royalties and Pogo tariff assumptions have also contributed.

Sustaining capital of 750,000,000 Australian, corresponding to $420 per ounce or on a year on year increase of $130 per ounce, primarily from higher development advance and associated underground ventilation, power and pumping infrastructure investment across underground operations, processing plant capital across all facilities to underpin asset availability and reliability, additional lease payments for open pit fleet at Yandal and KCGM, underground fleet at Pogo, and midlife rebuilds of the haul truck fleet at KCGM, and allocation of mine operating and development costs, including deferred stripping to all in sustaining costs for assets expected to reach commercial production during the year. These include Griffin Underground at Jundee, Wanda Underground at TBO, United Consoles at Fim Underground, and Bannockburn and Orillia open pit operations at Yandal. FY ’26 operational growth capital, excluding the mill expansion project, operational readiness and HEMI development, is guided at a midpoint of 1,170,000,000.00. At the Kalgoorlie production hub, the majority of the investment is allocated to projects will deliver the mill feed and infrastructure for the Casey Gem plant expansion. These projects include development and ramp up of Mount Charlottet and Finiston underground mines and infrastructure requirements and continuation of the Finiston South cutback.

At Yandall, investment primarily relates to Thunderbox open pit development infrastructure and required equipment for Bannockburn and the Aurelia stage two cutback. These two operations underpin future mill feed to Thunderbox. And at Pogo, US 70 to 80,000,000 for underground development and infrastructure associated with increasing mining volumes along with accessing new areas, as Simon mentioned, and further mill optimization works focusing on throughput and recovery. Growth capital expenditure guidance for the mill expansion project remains unchanged at 500 to $530,000,000,000. KCGM mill operational readiness capital of 315 to 370,000,000 includes spend for new tailings and a new thermal power plant and transmission infrastructure.

Capital for the additional tailings capacity was included in KCGM’s base case life of asset plan and included in the returns assessment of the expansion project. This capital has been brought forward to cater for the increased throughput rate from the expanded mill from FY ’27. At our HEMI development project, we are guiding a 140 to a 150,000,000 spend, which includes ongoing engineering and design as well as commitments for long lead time items. And our FY ’25 exploration program is guided at 225,000,000. Importantly, with the company’s strong liquidity position of 3,400,000,000.0 at thirty June, our capital investment and exploration activities fully funded.

I’ll now pass back to the moderator for the q and a sessions. Thanks very much.

Conference Moderator: Thank you. If you wish to ask a question, please press 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press 2. Your first question comes from Kate McCutcheon with Citi. Good to see KCGM underground above 3,000,000 tonnes.

So I guess we’ve had sell side expectations for CapEx for FY ’twenty six missed the mark, like $1,000,000,000 a year ago, close to $3,000,000,000 today, and a touch of that is HEMI, which is new. So I guess moving forward, can we expect some guide rails in terms of the CapEx band for a few years ex HEMI? Or what are the key things to think about in terms of dragging rights or not on CapEx for the medium term, both that 400 an ounce of sustaining and growth capital.

Stu Tonkin, CEO, Northern Star Resources: Yeah. Thanks, Kate. Yeah. Appreciate that that has definitely been an uplift to what’s been included in consensus, but I think if we kind of break it down into whether it’s price or activity, there were some activities there that that really need to be captured and understood. So the tailings facility is a big chunky piece at KCGM.

Appreciate that if the mill expands, we need to bring that capital forward. So it was in the life asset plan, but it’s bringing that capital forward. And we’ve guided, you know, what the saddle of that expenditure is this year and next year. Other items that may not have been picked up and then, you know, we hadn’t got it a year ago, things around the thermal power station and the transmission lines and the readiness for the renewable power projects in Kalgoorlie. There’s a there’s 80 odd million in this year, then it flows into 70 in the next year.

Those are those are items that weren’t weren’t forecast and predicted, but I can assure people that, you know, with a multi decade project, these are very strong return capital investments to ensure that we have power security. We have lowest cost of power availability, and we’re not held to held to the grid, held to ransom. And and Jundee is a great example where we’ve got lowest cost energy across the group because of that investment earlier. Other big items, obviously, the continuation of the Finiston mill this year, but that hasn’t changed. That that, you know, 500 plus million and then a tail of a 100 in FY twenty seven, that’s the same on track number for the for the feed for that that growth project.

And then the mining volumes are probably probably one of the things that’s that’s lifted a bit is and it’s on you get something for the money. It’s not just a price escalation, is the underground mining volumes at Fibberstone and and KCGM because of when the 3,000,000 tons is a production number, but there’s still a significant amount of development. You see in the quarter, you know, seven and a half kilometers, you know, we’re seeking to keep lifting that development lead indicator to build and and expose, you know, big tons per vertical meter there for future production. So this this is something where we’ll we’ll work hard to get that development done, which will translate into capital expenditure. So there’s some of those lumpy things.

I’ll I’ll throw it around on some of other capital items, but the the sustaining capital as well is something which we feel has lifted up, but there’s still an approach that is not a finite one year investment. There is there is multiyear benefit from some of that uplift in the sustaining cost at the moment.

Ryan Goerner, Chief Financial Officer, Northern Star Resources: Yeah. Just to add, Kate, look, just to call one out, I mean, the the midlife truck rebuilds at KCGM. So there’s there’s $20,000,000 just there on on some of those trucks. So so that’s that’s one item just just to pull out that, yeah, we’re we’re spending it this year, but they’re, you know, five year effectively investment cycles on on those types of trucks. So we’re we are incurring it this year in sustaining capital when we won’t see that next year.

Look. We are spending a bit of money on plant in terms of, you know, capital that, you know, I don’t think we will have to spend in the next few years. So, you know, we’re doing tank relines. We’re doing refurbishments, we’re doing some steel remediation on some of the you know, we’ve we’ve we’ve got aging infrastructure. It’s one reason why FIM expansion as well in that plant’s gonna be very beneficial for the company is that, you know, its capital requirements from a processing plant infrastructure is gonna be much less.

And then as Stu mentioned, you know, the underground infrastructure piece, we are having to put a bid in there this year again, particularly around KCGM, you know, just to, you know, that that multiple years investment around primary fans and infrastructure and things like that, it’ll still have a requirement going forward, but it’s it’s a bit heavier this year. So so I do expect some fall away on some of these items going forward from a sustaining perspective.

Conference Moderator: Okay. But there’s no plan to sort of give the market some medium term guide rails?

Stu Tonkin, CEO, Northern Star Resources: But it’s very difficult as we’ve shown to to predict and show what we can tell you the projects. We can tell you what’s approved and the actual commitments that are that are out there tendered locked, which is what we’ve done. And we’ve shown the tail of some of those projects, which are multiyear projects. But rounding up and giving multiyear guidance, we’ve not done that previously, and we don’t intend to do that today.

Conference Moderator: Okay. Got it. And we didn’t get that new outlook to FY ’29 today, so I am sticking on the guidance phase. Is that pending Hemi, or will that come with the Superpit site visit? I guess I’m looking to understand the business after next year.

Stu Tonkin, CEO, Northern Star Resources: Yeah. So, look, with the Calvary site visit, we’ll give some more color on both, on progress on HEMI, but HEMI is still preapproval. So the the timing, we can tell you what it looks like in space, but ultimately, this commencement is is is at our control on the on the hinged approval state. But overall, we’ll give you the view of what the op assets are doing at the Cavalry site visit.

Conference Moderator: Okay. That would be great. Thank you. And then finally, just removal of the hedging policy. That’s great.

Is it fair to assume that HEMI will be funded without any new hedging?

Stu Tonkin, CEO, Northern Star Resources: Yeah. So to be clear on what that is is we’ve just brought the minimum we’ve taken away a minimum hedging commitment, which was important to us whilst we were giving capital you know, long life capital projects investment. So so basically taking that floor away in the last three quarters, we’ve added no hedges, and that’s been the attitude because we’ve we’ve got confidence in the outlook in our balance sheet. So the policy is basically, yeah, removing the minimum and allowing us to essentially unwind it delivering to the current hedge book. So we’re not accelerating it.

We’re not delivering early. We’re just not not adding to it.

Conference Moderator: Okay. Thank you.

Stu Tonkin, CEO, Northern Star Resources: The attitude you just asked about, Emmy, the attitude would be we’ve got well capacity to deal with that within our current balance sheet without looking at hedges.

Conference Moderator: Okay. Makes sense. Thank you. Your next question comes from Hugo Nicolese with Goldman Sachs.

Hugo Nicolese, Analyst, Goldman Sachs: Congrats on a record free cash flow of 25,000,000 Just want to pick up on Kate’s question around the CapEx piece and sort of looking at what that ongoing spend is. If we try to break out what that ongoing cash cost versus all in sustaining cost, are you able to give us a bit more color in terms of that $750,000,000 for FY ’twenty six and what the rough breakdown is between the production centers?

Ryan Goerner, Chief Financial Officer, Northern Star Resources: They’re probably they’re probably all sort of going Hugo, it’s Ron. They’re they’re probably all increasing at similar, I’ll I’ll say, rates. I guess Kalgoorlie’s probably lifting this is Kalgoorlie operations probably lifting a $100 an ounce. Yandals, you know, $1.50 to $1.70, and then Pogo’s probably lifting 70 US an ounce. That’s that’s probably the the ranges, Hugo.

Stu Tonkin, CEO, Northern Star Resources: I’ll I’ll I’d say to the point saying it’s a bit

Stu Tonkin, CEO, Northern Star Resources: of a wave of investment. So we’ve moved from, say, $2.08 $280 an ounce to sort of $420 an ounce. So but it’s sort of hinging between, you know, 13% of of all the sustaining cost of sustaining capital to up to sort of 17%. Now a midpoint there is probably the happy place, and it will go in cycles. You know, some of that fleet lasts three years, the underground stuff.

Some of it’s five years for the open pit stuff. Big investments like capital, power, that at at one offs. So it it’s about smoothing and and going between those bands throughout the years. The sustaining capital number on a per ounce basis may sit around about that 15% of all in sustaining costs. So that’s that’s probably how it relates through to the dollar millions.

So that $7,700 plus this year is is probably a bit of a bit of a peak.

Hugo Nicolese, Analyst, Goldman Sachs: Great. Got it. Thanks for that, Ryan and and Stuart. And then sort of also picking up another point, when do you expect to be in a position to give that medium term outlook to market? I think historically, you’ve talked to later this year.

Do you need to get more certainty around the timing of HEMI before you can give that update and feel comfortable there, or can you give a a portfolio outlook on an ex HEMI basis and then maybe give the market something a bit earlier?

Stu Tonkin, CEO, Northern Star Resources: Look. The Gavali side visit will will provide as much as we can on, you know, visibility of these assets. I think we’re just we’re in the tail end of that five year strategy that’s a stabilized Pogo. It’s stabilized Yandall. You’ve still got that last step change piece at KCGM with the mill expansion, and then the sliding piece is the introduction of of of Hemi.

So this this this it’s quite a simplified look forward business, so we’ll try to we’ll try to show what that looks like. But, you know, if you’re asking us for for decade, you know, CapEx, ice, and production outlook, we we’re just never gonna give you give it give it out in that regard because it’s it’s a moving beast.

Hugo Nicolese, Analyst, Goldman Sachs: Yep. No. Understood. And and then on Hemi, just in press this week, just around appeals on on native title and then water discharge concerns. No doubt that probably would have come up in your DD.

What got you comfort there in in terms of water or alternative water treatment options and, you know, how much work is left to go to to either study those or or recost and and just sort of any comments on how those discussions are progressing?

Stu Tonkin, CEO, Northern Star Resources: Oh, thanks, Hugo. Got the question in in the second one. I thought I was expecting that from the media. Couple of clarities. One, the it was misreported that the EPA had approved Hemi.

So starting with with that, all the EPA has done is put out for public comment, the appeals window. So let’s let’s sort of stick to the process that is that is there, and and that attracts the appeals. We are very aligned with the thinking of all stakeholders out there, and there are lots of options. So, yeah, we don’t see anything different to what we’ve done through the due diligence and and just basically we’ll continue to to look at those options going forward. So, yeah, what’s being reported is to sell papers, not to not to deal with facts at the moment.

Hugo Nicolese, Analyst, Goldman Sachs: Great. Good to hear, Stu. I’ll pass it on.

Conference Moderator: Your next question comes from Daniel Morgan with Baron Joey.

Daniel Morgan, Analyst, Baron Joey: Hi, Stu and Ryan. Just on the super pit, it’s fair to say FY ’twenty five physicals were below plan. But just looking at the June numbers, looks like a big lift in underground ore mining, open pit material movements. Can you just expand a bit more on rectifications to the plan and whether these early wins look like they’re sustainable? Thank you.

Stu Tonkin, CEO, Northern Star Resources: Yeah. Thanks, Dan. I’ll let Simon just go through, because there’s some huge highlights in the quarter that that show confidence of why we set the plan forward. So I’ll I’ll I’ll throw it to Simon.

Simon Jessup, Chief Operating Officer, Northern Star Resources: Yeah. Thanks thanks, Daniel. Simon here. So in terms of the step change in the underground, we’ve been building with the development for that for a while. So the Phemerson underground itself delivered nearly 200,000 tonnes in the quarter, so that was the step change, as it as it moves into the stoping, side of side of, mining there.

So sort of step change in the Finston, which will be sustainable and ongoing continue to lift as we as we go forward. And then also at Mount Charlotte, just the, bigger, bulker bulk stopes starting to come through. So really, really pleased with the, step change we’ve seen in the underground. We we knew that was coming, probably probably a little bit later than we wanted in f y twenty five, but, you know, you can’t unsee that number now. 870,000 ton, great step change.

It’ll continue to build with the development as the lead indicator. You’ll see that, you know, build out as we go forward. But, underground’s underground’s in great shape really going forward. In terms of the, open pit, 22,700,000 tonnes for the quarter. That’s back where we need to be.

And we’ve also seen, with that extra volume, about a 37% reduction in the cost per BCM. So going really well in terms of the open pit volumes coming up and those costs starting to come down. So going forward, really comfortable in that 80 to 90,000,000 tonnes.

Daniel Morgan, Analyst, Baron Joey: And and just a couple of clarifications on on that. When you were saying Finiston did 200,000 tonnes, underground in the quarter, you’re just defining the area that’s not Mount Charlotte, I presume. And then just a clarification on the open pit material movements. I imagine in the quarter, you were more near the top of the pit, and so you got different you got shorter shuttle distances and and whatnot, whereas later in the later in the year, you’re planning to be in Golden Pike, where you’re deep in the pit. Just wondering if you could talk about sustainability once you have to go down to the bottom of the pit.

Simon Jessup, Chief Operating Officer, Northern Star Resources: Yeah. Good good question. The Phimiston the Phimiston side of the of the business has just seen that step change in in the stoping, so no no issues in in going forward with that. In terms of the open pit, yeah, the whole distance gets a bit a bit longer, but we’ve already started moving that. So we’ve got all the equipment, all the gear.

It’s really just simple mining versus what we’re dealing with in FY ’25, which was, know, dealing with a lot of big rocks in the East Wall. That’s all all behind us now, so we’re just seeing the productivities lift overall.

Daniel Morgan, Analyst, Baron Joey: Thank you. And the the plant at the super pit, I know it’s denoted often as a 13,000,000 ton plant per annum, did 11.8, I think, in the year. So there’s some unreliable is it is it what’s the confidence of of the throughput before you turn on the big mill expansion?

Stu Tonkin, CEO, Northern Star Resources: Yeah. We’ve we’ve factored it at 12 this year, Dan, for that reason. So there’s this set of balance. You know, Simon and Steve himself, we’ll be looking closely at you know, we’re about to turn on a new plant in twelve months. How much maintenance investment in an old plant or limping along?

So there’s a bit of a balance there. We’ve allowed we’ve allowed, you know, a buffer, so we’re not we’re not sweating that plant to get 13,000,000 tonnes per annum this year. So we’ve we’ve come back to the 12, allowing for some of that breakdown and some of the that that proactive sort of reactive maintenance because of the age of it. And this is that balance for not spending capital on something that you’re not gonna get the benefit from in future years with the new mill switchover. If it’s something that will be used in concert with the new plant, absolutely, we’ll invest.

But it’s this bit of a balance where we want it to we want it to run confidently up till the day we switch over and then be done.

Daniel Morgan, Analyst, Baron Joey: Very clear. Thank

Conference Moderator: Your next question comes from Matthew Fragman with NST Financial.

Matthew Fragman, Analyst, NST Financial: A couple of questions from me. Firstly, can I just continue the thread of the prior questions on the medium term outlook and your CapEx guidance? And you talked about the thermal power station and tailings dam at KCGM. Obviously, reasonably material items, which were likely already in your capital works plan for the year and, you know, really arguably part of part of the total budget and the economics for the mill expansion, but obviously hadn’t really been clearly spelled out to the market. So, you know, again, just picking up on some of those prior comments, do you think differently maybe about how you approach some of the more forward looking outlook on those sorts of items?

And then particularly as you come to building hemi or maybe other major projects, I mean, I know you said it’s not going to be practical to give a ten year outlook for the business as a whole, but certainly, I think from a market perspective, probably something worth considering if if those sorts of capital works are already kind of in the budget.

Stu Tonkin, CEO, Northern Star Resources: Yeah. I I appreciate that. Look. The the $1,500,000,000 mill expansion, we were very clear on the boundaries and ring fence of what that was, and we’re very clear that it did not include the tailings facility and that the tailings facility is related to the tidal tons of life asset. But the relativity is it’s gotta be established and built earlier so that your mill throughput can pick it up.

Right? So it was the the the economics and the returns were based on that stockpile going through the expanded plant, and they are still true and robust. There’s nothing missing from any of those those articulated returns metrics. But the, yeah, the visibility of multi years to get these things done, appreciate we still had the section 38 approvals for that extra footprint for the advancement of all those things. So they’re all in trying to be to be approved and put there.

But our ability to either get hard, you know, hard tended numbers, internal, external contractors or or owner operator activities, all the pricing around all that, We we we’re you know, two years ago, we were not in a position to give forecasts on capital, hard capital numbers, or if we had us, that’d be different today. So I think appreciate that we I’d rather give you no numbers than wrong numbers. We give you the the, you know, the the foresight of what type of activities or what projects are in front of us. And so when we talk about near term, you’re asking for multiyear detailed capital and and sustaining cost guidance, and we’re we’re giving you the elements of the big projects that are that are being approved and being budgeted. But as far as the stitch up together, we can give, you know, our guidance to production outlooks.

But, you know, you look where we are five years on, 2,000,000 ounce target, you know, which is still a a project where the company assets can deliver. However, FY ’26 when we projected this five year plan to get there, we’re not there. And you can see the impact that the the market’s had on us because we haven’t delivered to the decimal point. However, all those projects and the viability and the returns of them are still very significant, very important, and still in train. And so we’re a bit gun shy of really giving granularity that then we get held to why isn’t it that number.

So it’s a bit of a balance here. We’re gonna try and tell you as much as we can tell you to to what we’re looking at working on, but give us a bit of grace to to say, look. You know, there’s there’s still some hard numbers. No doubt to Hemi. Hemi’s CapEx numbers are stale.

So when once we get that refreshed and renewed and we know when the approvals are, we will be able to articulate what those numbers are with confidence. But right now, we’re stuck on the DFS plan and numbers that that are out there.

Matthew Fragman, Analyst, NST Financial: Yeah. I understand. Thanks for the additional commentary there, Sue. I mean, we’re all pretty simple based as analysts or at least at least I am. So anything you can spell out for us, obviously, is quite helpful in terms of the medium term outlook, so I appreciate that.

Maybe secondly, on capital management and shareholder returns. I mean I think I probably sound like a bit of a broken record on these quarterly calls at the moment. But as you alluded to there, your share price performance is disappointed relative to the peer group and gold price. You picked up arguably a bit of excess cash with the DeGray acquisition, you know, now sitting at $1,900,000,000 cash and bullion. If I do the math on your dividend policy in the second half, you’re probably only likely to return up to maybe 500,000,000 of that with the final dividend.

So can you comment on the attractiveness of potentially a new buyback program in FY ’twenty six? And how do you think about weighing that up as in weighing up a new buyback against maybe closing out some of the out of the money hedges given your revision to the hedging policy? Thanks.

Stu Tonkin, CEO, Northern Star Resources: Yeah. Good. I’ll work in reverse. There’s really no benefit in closing out hedges. There’s far many far more better returns, investments than that one.

And it’s really I know it’s a big overall number, but relative to our business and relative to the unhedged ounces, we’ve got, you know, really good exposure and leverage to gold price. So the the hedge one is a lower priority. But you’ve seen that our commitments are to not add hedges and not not compounded. Then you come back to all of the organic projects that we’re investing in have have very strong returns, and they are taking the priority. We were very pleased with the $300,000,000 buyback that we we got in at $11, and we we see that as a valuable tool in capital management.

And I think the board in time will assess the opportunity to do that again. But at the moment, looking at looking at surplus cash flow, we see the greatest returns in order and ranking back into these organic projects that we are there. Doesn’t mean a buyback’s not compelling when we’re we’re at a discount to NAV, but, the returns out of these organic investments, you know, are significant. So we we wanna make sure that we, you know, we complete those, in in good order.

Matthew Fragman, Analyst, NST Financial: Yes. Thanks, G. Good problem to have. Thank you for the comments.

Conference Moderator: Our next question comes from Al Harvey with JPMorgan.

Al Harvey, Analyst, JPMorgan: Apologies to look back at some of the guidance and outlook you did put in some of your early presentations. But I guess just in the context of the sustaining CapEx discussion at KCGM and cost more broadly, do you think I think the target in there was for the project to do about $14.25 an ounce all in sustaining cost once your rates had 900,000 ounce per annum steady state rate. So is that still achievable, and might we get a little bit of an update on that at the site? Is it it’s coming up?

Stu Tonkin, CEO, Northern Star Resources: Yeah. Good. Thanks, Adele. Look. It it’s a style number, and what we’re really looking at is the overall step change improvement to the cost base once that new mill comes in and the savings on the cost per ton for that new expanded efficient plant plus all the other good stuff Simon’s got in hand with productivity gains and and improvements and growth in the underground.

So, yeah, hard again to to circle right back to a a firm number, but why that number was relevant was, you know, when we costed up the feed for that $1,500,000,000 investment. We’ve tested it at 2,700 Australian dollars an ounce. We got a pretty, you know, solid IRR with a significant, you know, $202,100 plus, 250,000 ounce uplift for a $250 reduction in AISC. All these things were relative to the decision at the time, including the hedges. Right now, as we know, all of those numbers have moved, but directionally, this is the investment and the improvement on the overall operating cost of that asset, which will be half our business, is still very compelling.

And I think it’s on a percentage basis, we’ll surpass, you know, the investment case on the on the day. So, yeah, that $14.25 is is perhaps a stale number, albeit this asset will be a top five global gold mine, and it will be, you know, settling or inside the the third lowest quartile global cost curve, and that’s been the the investment case. So relative, it will generate as much cash flow as as anything globally. And so that’s been that’s been the continuation, the remit of what we’ve been trying to trying to achieve out of that build.

Al Harvey, Analyst, JPMorgan: Yep. Thanks, Ge. And maybe just one on the the annual hub, I think, five year plan. You did you did note that it has stabilized there, but probably at a bit lower level. I think you’ve been targeting about that hub to do about 600,000 ounces per annum longer term.

So I think you kind of alluded to it. Maybe it’s it’s just a timing issue, but but how do we think about the time frame that we might end up getting there to that 600,000 ounce per annum rate?

Stu Tonkin, CEO, Northern Star Resources: Yeah. Look. I that’s one and I’d look at Thunderbox particularly. That’s one that we’re we’re jury’s out on, and we’re road testing its capacity to do that 300 consistently. We’ve got the 6,000,000 ton per annum nameplate that Simon’s demonstrated, but really this is a great blend.

And so what we tested and why we really didn’t push hard to this total 2,000,000 ounces in in urgency is at what cost. When you start looking at some of the ounces we can grab and drag in, perhaps you’re changing cutoff grades, perhaps you’re changing which in turn changes. Don’t wanna chase a number at any cost. We wanna look at margins. We wanna look at the happy place that these assets produce at.

So well spotted, but that’s something that I would I would retest what is the happy state for Yandall generally, which demonstrated what Jundee can consistently do. But the Thunderbox region, we wanna make sure that we’re not just trying to sweat it to get around number. We’re getting the best overall margin and and and the best ice that we can achieve out of that.

Al Harvey, Analyst, JPMorgan: No worries. Thanks thanks again, Steve.

Conference Moderator: Your next question comes from Hugo Nicolese with Goldman Sachs.

Hugo Nicolese, Analyst, Goldman Sachs: I just wanted to round back on the power station CapEx. And obviously, it looks like an upfront CapEx hit near term, but we haven’t really talked too much to the benefit you expect to extract out of that one. So maybe just with a reference, you mentioned Jundee and the power works there. What sort of operating cost saving you expect to get out of putting in new power infrastructure at Kalgoorlie?

Stu Tonkin, CEO, Northern Star Resources: Okay. So the to to clarify what it is, we’ve obviously got the thermal the the joint venture with the thermal for the Paxton Power Station presently, which is quite aged infrastructure, and we know we know the cost of that. We know the cost of the grid, and I’m not gonna use commercial and confidence numbers, so I’m not gonna be giving you hard cents per kilowatt hour. But we’ve got the grid cost that we’ve got in front of us right now that we know. And then we look at absolute capacity that the the site needs, and we’re saying we would prefer to have our renewables.

We prefer to have the lowest cost thermal generation that we can have. So this investment at the moment is saying, I could generate all the power from Paxton and feed KCGM, the expanded case, but it would probably be some of the highest cost energy. And we cannot rely on the state grid. It cannot provide the power that we need in Kalgoorlie. So we’ve gotta go alone here, and it will be the the highest cost as well on staying on the grid.

So what we’re doing in the first instance is the thermal backing for, you know, new gas fired power station, you know, nearly a 120 meg of power installed. It will underpin the base load for a large renewables wind solar battery system, which in time will be through a PPA, through a third party likely. But this this foundation investment is a joint venture with a thermal power station and all the connectivity distribution to KCGM to give us power security and give us confidence of price. So we we know that we’ll be some of the best pricing that we can ever achieve in Kalgoorlie, and it will be probably on par with Jundee, but it still relates to the the the gas price we get to to the gate there. So, yeah, not gonna give you hard commercial confidence numbers, but we’ve we’ve weighed up the our attitude is we’ll get the lowest cost that we can get out of the goldfields.

Hugo Nicolese, Analyst, Goldman Sachs: Fantastic. Thanks, Stuart. And then just another one around the divestments piece. You’ve historically talked to the potential to rationalize the portfolio. Any updates there in terms of timing or or sort of high level what you’re thinking of of where those could come from?

Stu Tonkin, CEO, Northern Star Resources: Yeah. I mean, good question. Look. We the

Stu Tonkin, CEO, Northern Star Resources: outlook’s probably around, you know, who are the buyers and and what are they prepared to to front up because what we’ve guided for here, all the assets we we have are all contributing. You know, Simon and Ryan spoke about the cash contribution that each of these assets are doing. Not nothing’s holding us holding us back. In fact, they’re helping fund the the growth. So, yeah, unless we’re paid paid well for those assets, you know, they’re in the fold at the moment.

You’ve seen some minor, you know, minor things like the the Central Tanami project. We still love and believe in that ground and and see that opportunity. But as far as the scale for Northern Star, it’s probably not gonna get there. But, you know, there’s an example there where we can do small divestments to, you know, say simplify, but put it in the right hands for people that can advance the project. But on the on the other side is we’re not out here running processes and and putting things for shop.

We’re we’re investing in our in our projects, and they’re contributing well.

Hugo Nicolese, Analyst, Goldman Sachs: Great. Thanks to you.

Conference Moderator: Once again, if you wish to ask a question, please press Your next question comes from Levi Spry with UBS.

Levi Spry, Analyst, UBS: Day, Stuart and team. Thanks for your time. Maybe just rounding back to some of these questions. So on the CapEx, thanks for the extra lead on the sustaining piece. Just on this operational growth CapEx line, what percentage of that is a go forward number, in my mind, a sustainable number, repeatable, whatever the terminology you wanna use, particularly in into a 20 f y twenty nine.

Yep.

Ryan Goerner, Chief Financial Officer, Northern Star Resources: F y twenty nine.

Simon Jessup, Chief Operating Officer, Northern Star Resources0: It’s a

Ryan Goerner, Chief Financial Officer, Northern Star Resources: long way out. Look. I think I think look. At the end of the day, the the majority of the if we just break it down, Levi, the majority of the spend is in relation to the growth of Mount Charlotte, FIM underground, and then the cutback. So I I would suggest, and we’ve gotten that, you know, 500 to 550,000,000.

That will likely continue for a few more years until we get some steady state particularly in in the underground. So that’s, you know, that that’s gonna be in the business for a few more years, and that, as you know, gives us that long term feed source. Across the other assets, you’ve got, you know, Bannockburn and Aurelia make up a large chunk of the the sort of the Yandel growth. It’s about 220,000,000, I think we’ve guided. Again, you know, those two assets are coming into productive years, I’ll say.

So I’d probably say those that that CapEx would drop there, but then there’s but then there’s other satellite pits opening up that then will will will take the place of those two. So I could probably see some drop off, small, but but, again, there’d be capital for other projects coming in for the open pit feed source there. And then across the assets else, you know, they’re they’re sort of smaller smaller targets and smaller projects that we’re we’re delivering. Yeah. It might might will be Hercules comes into the plan around around the South Cowal region to to feed KCGM or or or KB as well in the years going out.

Again, I can’t give you a number of what that’s gonna be, but I I it’s not gonna be a large, large chunky bit

Stu Tonkin, CEO, Northern Star Resources: of capital for that to come online. Yeah. I think the the key thing is any any capital investment growth projects, I mean, comes commensurate with the production growth. It’s just the timing and the lag of when that actually comes in. So, you know, with with investments that were previous years, you still haven’t really seen the step up in the production coming from that historic investment, and we’re trying to align the the CapEx this year is aligned with the growth this year.

We don’t see a lot of growth. It’s coming in future years, and any investment in capital going in, you know, ’27, ’28, ’29 comes with further production growth after that. So just all to Ryan’s point around, you know, if you start a new underground or a new pit and do a cutback for a $100,000,000, it will kick in, you know, extra ounces on the back of that, which will either, you know, fill a hole of a dip or it’ll add to the add to the ounces of that that operation. But the big structural CapEx events, Finister mill expansion is complete and falls away as its tailings facility is built for for a decade. The hemi is the big lump that that’s to come.

That’s that then commence comes with commensurate 500,000 ounces, you know, years later. I think a view of Pogo, you know, it’s doing great. It’s generating good US dollars. What else can it do? So people say, oh, you know, how much CapEx is that?

Well, what’s the price? And and and what’s the the payback and the investment? We’ll we’ll do some thinking around that that could occur before ’29. But other things in or out, you know, these are really And every ounce that that lifts up attracts that dollar per ounce sustaining capital.

So, you know, it might be a case where some of this CapEx, this growth slides across and is called sustaining because it’s attached to the ounces that are being maintained. So, yeah, we we’ll probably we’ll probably point to big lumpy projects to not scare people with the renewables Kalgoorlie. It’s a big number, but it’s likely to be outsourced to a third party and embedded in a in a lower operating cost or a PPA as opposed to Northern Star paying for that capital for that big renewables project. The capital at the moment with the thermal and the we want control of the connectivity in the head end of the, yeah, connection through to the grid as part of our owned infrastructure. So we’re not, I guess, held ransom on that.

That is like, we have the power at the moment. We’ve got retail, wholesale generation in Kalgoorlie. We wanna maintain some ownership of those things. Hence, why we’re willing to put that capital up. We could have outsourced that capital, give it to a third party, but then we’re paying rent on it forever.

Levi Spry, Analyst, UBS: Yep. Yep. Thanks. Appreciate the extra detail. And and maybe just a second one around the the KCGM ramp up.

So it looks like you’ve reiterated 900,000 ounces in ’29 and the the processing sort of throughput. So so it’s really just just a question around the grade. Can you just remind me around underground ramp up? So the really good quarter you just had, 3,000,000 tonnes now. I think previously, you’ve said 8,000,000 some point in time.

Can we just just help us sort of work out that profile, grade that matches this throughput?

Stu Tonkin, CEO, Northern Star Resources: Yeah. Not today, Levi. I reckon we’ll we’ll give you that color at the at the Kalgoorlie site visit with the operation. But, yeah, what we’ve said is 3,000,000 tonne per annum from the underground this year, and we’ve shown a run rate above that for the for the quarter. So it gives people confidence of that.

Levi Spry, Analyst, UBS: Roger. Okay. Thank you.

Conference Moderator: Your next question comes from Mitch Ryan with Jefferies.

Simon Jessup, Chief Operating Officer, Northern Star Resources0: Just wanted to dig into SG and expansion CapEx a little bit. You should have I know we’re not talking ship stations in Quantum, but CapEx spend for the year was GBP $544,000,000 versus guidance of 500,000,000 to $530,000,000 It’s only gone over a little, but then you’ve maintained the profile into ’twenty six and ’twenty seven. Can you talk to how much of that was just timing of capital spend versus how much was inflation? And do you see any risk at all to the upside on on that capital number?

Ryan Goerner, Chief Financial Officer, Northern Star Resources: Mitch, it’s Ryan. Now look, there was there was a couple of items that were expedited the in in that last couple of months, and there were some choices around doing some some structural modulation of steel, which which just meant that, basically, we we just had to upfront some of that some of that cost. So nothing in relation to an, you know, overrun or or or inflation. It’s all it’s all tracking as we as we as we plan right now.

Matthew Fragman, Analyst, NST Financial: Okay. Thank you. Appreciate the color.

Conference Moderator: There are no further questions at this time. I’ll now hand back to mister Tonkin for closing remarks.

Stu Tonkin, CEO, Northern Star Resources: Alright. Well, thank you very much for joining us on the call, and I appreciate your interest in our company and what is a very busy reporting day. And I look forward to catching up for many of you at our annual visit to to Kalgoorlie. So thanks, and have a great day.

Conference Moderator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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