Northern Star Resources Ltd has issued a fresh warning regarding its production targets for the 2026 financial year, signaling potential difficulties in meeting even the lower end of its guidance. The gold producer pointed to ongoing underperformance at the Kalgoorlie Consolidated Gold Mines (KCGM) processing mill and reduced mining rates at its Jundee operation as primary constraints.
In a market update, the company reported gold sales of 220,000 ounces for the combined months of January and February. Based on current operational performance, management now estimates FY26 production will come in above 1.5 million ounces. This revised outlook represents a reduction from the guidance provided in January, which projected a range of 1.6 to 1.7 million ounces. That January forecast was itself a downward revision from an earlier target of 1.7 to 1.85 million ounces.
The announcement has placed renewed pressure on the company's share price. According to recent data, the stock closed at A$26.77 on Thursday, marking a decline from A$29.36 just one week prior. This downturn contrasts sharply with the share price rally witnessed in February, when the stock surged as much as 6.7% to A$30.16 following the release of strong half-year earnings.
Those February results highlighted a robust financial performance, with reported net profit after tax reaching A$714 million and underlying profit hitting A$760 million. The company maintained its interim dividend at 25 Australian cents per share, fully franked. However, the latest operational warning underscores that fundamental challenges at key assets persist despite the benefit of strong realized gold prices.
Managing Director Stuart Tonkin emphasized that the company will not allow short-term pressure to meet the FY26 forecast compromise its strategic transition. "Our focus over the next four months will be on positioning the business for increased output and more efficient ounce extraction from FY27 onwards," Tonkin stated. He confirmed that commissioning for the KCGM mill expansion remains scheduled for early in the 2027 financial year.
Significant resources are being dedicated to the plant upgrade, with approximately 800 contractors working on the mill itself and another 400 focused on enabling works. The company has also stockpiled roughly 100,000 ounces of high-grade run-of-mine ore by the end of February, which is slated for processing in the next financial year following the expansion.
Concurrently, Northern Star has initiated an operational review at its Jundee mine, aiming to reduce costs and sharpen focus on higher-margin ore. The company may redeploy surplus staff and equipment during the June quarter. Investors are expected to receive a more comprehensive update when the March quarterly results are published on April 22.
The production warning arrives amid a mixed backdrop for the gold sector. The precious metal declined over 1% in recent trading, slipping to around $5,118 an ounce, as a stronger U.S. dollar and rising Treasury yields exerted downward pressure. Market analysts note that ongoing geopolitical tensions continue to provide some safe-haven support for bullion prices.
Northern Star has indicated that updated medium-term production, cost, and capital expenditure forecasts will be released by the end of the calendar year, in response to investor requests for greater detail. The company's management is scheduled to provide a further update at 8:00 a.m. AWST on Friday.
