Northern Star Resources strengthened its cash flow and maintained FY26 production guidance above 1.5 million ounces despite cost inflation and operational challenges. The KCGM Mill Expansion remains on track for early FY27 commissioning, underpinning confidence reflected in a $500 million share buy-back announcement.
- March quarter gold sales of 381koz at AISC of A$2,709/oz
- Underlying free cash flow of A$301 million and net mine cash flow of A$426 million
- KCGM Mill Expansion project on schedule despite cost and productivity pressures
- FY26 production guidance maintained above 1.5Moz with AISC guidance of A$2,600-2,800/oz
- On-market share buy-back of up to A$500 million announced, signaling confidence
March Quarter Delivers Strong Cash Flow Amid Operational Hurdles
Northern Star Resources (ASX:NST) posted a robust March 2026 quarter with gold sales reaching 381,000 ounces at an all-in sustaining cost (AISC) of A$2,709 per ounce, generating underlying free cash flow of A$301 million. Net mine cash flow stood at A$426 million, reflecting improved operational efficiency and prioritisation of high-margin ounces despite ongoing mill constraints at KCGM.
The company’s safety metrics remained solid, with a Serious Lost Time Injury Frequency Rate (SLTIFR) of 0.6 injuries per million hours worked, underscoring a consistent commitment to workforce wellbeing.
KCGM Mill Expansion Project Progresses with Adjusted Costs
The KCGM Mill Expansion, centred on the Fimiston Processing Plant in Kalgoorlie, is tracking towards commissioning in early FY27. The project will nearly double throughput capacity to 27 million tonnes per annum and consolidate processing activities by closing the Gidji facility. Despite cost inflation and productivity setbacks pushing FY26 capital expenditure guidance up to A$680-700 million from an earlier A$640-660 million, the expansion remains on schedule.
Operational readiness capital expenditure has been revised down slightly to A$330-350 million for FY26, reflecting delays in approvals for the thermal power plant and transmission infrastructure, with spending deferred into FY27. The consolidation aims to simplify operations and lower long-term costs, with Stage II works expected to complete by calendar year end.
This update follows the company’s earlier operational challenges at KCGM, where mill throughput remains a key variable influencing production outcomes. The revised FY26 guidance anticipates gold sales at KCGM between 450,000 and 480,000 ounces, down from previous forecasts but balanced by cost management and prioritisation of higher-grade ore from the Golden Pike North area.
Operational Reviews and Regional Performance
Yandal’s Thunderbox mine delivered a 26% increase in gold sales to 59,000 ounces, driven by higher-grade ore and improved mill recovery. Meanwhile, Jundee is undergoing an operational review to reduce costs and stabilise production profiles, with technical work ongoing and outcomes yet to be determined. The return to conventional ore processing at Jundee late in the quarter contributed to a modest increase in gold sales despite underground ore availability constraints.
Pogo’s operation benefitted from successful stope optimisation initiatives, boosting gold sales to 66,000 ounces and lowering AISC to US$1,529 per ounce. The underground mine maintained steady development rates, supporting future production growth and potential mine life extension.
Strong Balance Sheet Supports Capital Investment and Buy-Back
At quarter-end, Northern Star held cash and bullion of A$1.18 billion and net cash of A$320 million after paying a A$347 million dividend. The company refinanced its undrawn A$1.75 billion corporate bank facility, extending maturities to 2030 and 2031, providing financial flexibility.
Reflecting confidence in its cash generation and structural uplift expected from the KCGM mill ramp-up, Northern Star announced an on-market share buy-back program of up to A$500 million commencing 23 April 2026. This move complements the company’s disciplined capital allocation strategy and follows a recent $500M share buy-back announcement.
Exploration and Development Progress
Exploration expenditure remains steady at approximately A$225 million for FY26, focusing on life-of-mine extensions and in-mine growth. The Hemi Development Project continues advancing through engineering, design, and regulatory approvals, with a final investment decision targeted for FY27. Northern Star is actively engaging with traditional owners and regulators to progress permitting.
The integration of the De Grey acquisition adds further scale, with tax depreciation benefits expected to enhance cash flow in FY27 and FY28, though transaction costs remain estimated between A$200-250 million.
Bottom Line?
Northern Star’s operational resilience and strategic capital investments position it well for FY27, but the market will watch closely how KCGM’s mill commissioning and Jundee’s review shape near-term production and costs.
Questions in the middle?
- How will the final commissioning timeline of the KCGM Mill Expansion impact FY27 production and cost guidance?
- What outcomes will the Jundee operational review yield, and how might they affect future cash flow and margins?
- Can Northern Star sustain its exploration momentum and secure timely approvals for the Hemi Development Project?