Northern Star Resources reported higher annual profit and an outlook that, while missing consensus, appeared to soothe market fears, as the Australian gold producer scrambles to improve operational consistency and returns.
The miner has entered the crosshairs of activist investor Elliott Investment Management, which says it has built a 5.6% interest in the company and is calling for a board overhaul as well as comprehensive strategic and operational reviews.
Northern Star, Australia's biggest gold miner, has been grappling with operational challenges, resulting in repeated downgrades to investor guidance. Its struggles mean it hasn't been able to fully capitalize on strong gold prices, which reached a record high earlier this year.
On Thursday, the company forecast gold output of between 1.50 million and 1.65 million troy ounces in the coming year. That compared with sales of 1.54 million ounces in fiscal 2026 and was, at its midpoint, roughly 3% below a consensus estimate compiled by Visible Alpha.
The miner's guidance for fiscal 2027 all-in sustaining costs, a closely watched measure of how much it costs to produce an ounce of gold, was 7% higher than consensus.
"We think, while it is weaker than consensus, it is better than the market feared," Barrenjoey said of guidance in a note to clients.
To be sure, "management will need to convince market this is credible" given prior guidance downgrades, it said.
Fueled by a tailwind from higher gold prices, shares rose as much as 8.4% early Thursday. The stock was 6.3% higher by midafternoon in Sydney amid sharp gains across Australian gold equities.
Strong gold prices fueled a rise in annual profits for Northern Star. The miner said its net profit climbed 24% to 1.66 billion Australian dollars, equivalent to US$1.18 billion, in the 12 months through June.
Revenue was 19% higher, mostly because of a 26% increase in the average price the company was paid for its gold. Sales fell 6%, while the miner's cost of sales increased.
Directors of the company declared a final dividend of 30 Australian cents a share, in line with its payout a year ago.
"We are at an important inflection point for Northern Star," Chief Executive Stuart Tonkin said.
"The KCGM Mill Expansion marks a significant milestone for the company, with the expanded processing plant expected to deliver greater operational consistency and reliability, while supporting a significant increase in free cash generation as it ramps up."
Tonkin is preparing to step down as CEO after roughly a decade in the role, and will be succeeded later in the year by Suresh Vadnagra, the head of Glencore's nickel and zinc industrial assets.
The miner flagged Tonkin's intention to depart in May, two weeks before Elliott announced its stake in the company. The activist investor is urging significant change, including a "substantially enhanced" board to support the incoming CEO.
Last week, Elliott said it had lined up several potential new independent directors for Northern Star, with candidates including Mark Cutifani, the former CEO of Anglo American, and Graham Shuttleworth, the former chief financial officer of Barrick Mining.
In response, Northern Star said it has its own board renewal process under way, and that Elliott has "been unable to suggest any tangible actions which were not already being taken by the board."
Tonkin said the miner is committed to improving shareholder returns.
While the focus of analysts Thursday was on the miner's outlook, Northern Star didn't provide a view beyond the year ahead.
"Obviously, we've got a new CEO coming," said CFO Ryan Gurner, who will be interim CEO between Tonkin's departure during the first quarter of fiscal 2027 and the arrival of Vadnagra in October.
"He will have a view and I guess we'll go through that as a business and we plan to come back to the market with medium-term guidance later," Gurner told analysts. "So I can't give you beyond FY27 for now."