363,891oz sold as Northern Star holds FY27 guidance steady

KCGM tie-in clears the next hurdle

Northern Star Resources Ltd (ASX:NST) has completed the physical tie-in of its existing KCGM circuit to the expanded Fimiston plant, moving the company into the more consequential phase of establishing stable, sustained production. The tie-in was completed on 28 September, with commissioning now under way, although the work finished about two weeks later than anticipated after minor issues involving the thickener and ball mill.

The operational milestone arrives alongside a softer quarter. Northern Star sold 363,891 ounces of gold at an all-in sustaining cost of A$3,217 per ounce, while all-in costs reached A$4,647 per ounce. KCGM’s commissioning reduced milled tonnes, grade and recovery during the period, contributing to lower gold sales from the Kalgoorlie production centre and lifting its AISC to A$2,919 per ounce from A$2,589 per ounce in the June quarter. The company’s earlier KCGM commissioning milestone had marked the start of the project’s transition into commissioning.

Guidance holds despite uneven quarterly performance

Northern Star kept FY27 guidance unchanged at 1.5 million to 1.65 million ounces of gold sold and a group AISC of A$3,050 to A$3,450 per ounce. Production is expected to be weighted to the second half as the expanded KCGM processing facility ramps up, with KCGM forecast to contribute 550,000 to 650,000 ounces.

The quarter was mixed across the portfolio. Yandal sold 117,631 ounces at an AISC of A$3,687 per ounce, with improved grades at Thunderbox partly offset by higher sustaining capital. Pogo sold 52,720 ounces at US$2,307 per ounce, as a plant shutdown and underground infrastructure works disrupted mining and processing. The company expects Pogo’s ore bin and main haulage infrastructure to return to service in late October, with mining rates expected to normalise through the December quarter.

Cash generation was positive at mine level but negative for the group

All three production centres generated positive net mine cash flow, producing a combined A$210 million. Kalgoorlie contributed only A$15 million after A$418 million of growth capital, much of it directed to KCGM, while Yandal generated A$138 million and Pogo A$57 million on the company’s Australian-dollar reporting basis.

That mine-level result did not translate into positive underlying free cash flow. The group recorded underlying free cash flow of negative A$31 million after A$113 million in corporate tax payments, A$76 million in equipment finance and leases, and other capital outflows. Cash and bullion ended September at A$1.2 billion, before Northern Star drew A$500 million from its banking facilities on 9 October ahead of the final FY26 dividend. The company said the draw maintained financial flexibility and targeted cash on hand; it also leaves the balance sheet with additional debt exposure during a capital-intensive expansion.

Stage II and Hemi extend the capital pipeline

KCGM Stage I project spending reached A$1.746 billion, close to the forecast total project cost of A$1.75 billion to A$1.81 billion. Stage II construction continues, with commissioning scheduled for early in the second half of FY27. Northern Star expects the single-hub design to lift recovery by 1% to 2% and remove concentrate haulage between KCGM and Gidji, but those benefits remain dependent on successful commissioning and operating performance.

Meanwhile, Hemi studies and permitting remain on track for a late-FY27 Final Investment Decision. Managed Aquifer Recharge trials began during the quarter, while Northern Star estimates A$300 million to A$350 million of Hemi-related cash tax savings in FY27 and A$200 million to A$250 million in FY28. Those estimates sit alongside an estimated A$200 million to A$250 million of transaction costs, including landholder duty, subject to asset classification and the duty determination.

The next test is sustained throughput

New Managing Director and CEO Suresh Vadnagra, who started on 5 October, said his immediate priorities were understanding the business, completing the KCGM expansion safely and efficiently, and delivering consistent performance across the portfolio. His arrival follows the company’s earlier CEO transition announcement, which identified the leadership change as a milestone alongside the KCGM project.

For Northern Star, the important number now is not simply whether the expanded plant has been connected. It is whether KCGM can convert that connection into reliable tonnes, grade and recovery without pushing capital and cash demands beyond the ranges underpinning FY27 guidance. The December quarter should provide an early indication, with Pogo’s infrastructure restart and KCGM’s commissioning performance arriving at the same time.