Rising Costs and Lower Sales Challenge Northern Star Despite Profit Growth

Strong Profit Growth Despite Operational Headwinds

Northern Star Resources Ltd (ASX – NST) has delivered a solid financial performance for the half year ended 31 December 2025, reporting a 41% increase in net profit after tax (NPAT) to A$714 million. This uplift was primarily driven by a 31% rise in the average realised gold price, which offset a decline in gold sales volumes and rising operational costs. Underlying NPAT, which adjusts for one-off items, surged 49% to A$760 million, underscoring the company’s resilient earnings base amid a challenging operating environment.

Revenue climbed 19% to A$3.41 billion, while underlying EBITDA rose 34% to A$1.88 billion. However, cash flow from operations declined 18% to A$1.03 billion, reflecting a combination of softer second-quarter performance, elevated tax payments related to prior periods, and increased investment in growth initiatives.

Dividend Maintained and Balance Sheet Strengthened

Despite the operational softness, Northern Star declared a fully franked interim dividend of 25 cents per share, consistent with the prior period. The company’s balance sheet remains robust, with net cash of A$293 million and cash and bullion holdings of A$1.18 billion, providing ample liquidity to support ongoing capital expenditure and shareholder returns.

Guidance Revisions Reflect Operational Challenges

Northern Star revised its FY26 production guidance downward to 1.6-1.7 million ounces from an earlier range of 1.7-1.85 million ounces. This adjustment was driven by lower gold sales across its three production centres; Kalgoorlie, Yandal, and Pogo; during the December quarter. Additionally, all-in sustaining costs (AISC) guidance was increased to A$2,600-2,800 per ounce, up from A$2,300-2,700, reflecting higher royalties linked to elevated gold prices and lower sales volumes.

Heavy Investment in Growth Projects to Drive Future Returns

The company continues to invest aggressively in its growth pipeline, with forecasted capital expenditure of A$2.3-2.4 billion for FY26. Key projects include the KCGM Mill Expansion and the Hemi Development Project, both expected to significantly enhance production capacity and reduce unit costs from FY27 onwards. The KCGM Mill Expansion is on track for commissioning in early FY27, which management anticipates will materially improve cash flow generation and return on capital employed.

Exploration expenditure remains robust at approximately A$225 million, reflecting Northern Star’s commitment to sustaining its long-term resource base. The company’s diversified asset portfolio and disciplined capital allocation strategy aim to position it as a low-cost, high-margin global gold producer.

Looking Ahead

Managing Director Stuart Tonkin emphasised the company’s focus on operational excellence and medium-term production growth, despite recent challenges. Northern Star’s strategic investments and strong balance sheet provide a foundation for delivering attractive shareholder returns while navigating inflationary pressures and market volatility.