Northern Star Resources (ASX: NST) – Shining Bright with Triple-Digit Gains, Record Results, and a Game-Changing Gold Acquisition

Key Takeaways: Northern Star Resources continues to be one of our top long-term picks, delivering a total return of +109% since our initial recommendation. In the first half of FY25, the company posted record revenue of $2.87 billion—up 28% year-on-year—driven by a sharp rise in the realised gold price to $3,562 per ounce. Underlying EBITDA jumped 58% to $1.4 billion, while statutory NPAT more than doubled to $511.5 million. While the March quarter brought some headwinds—particularly at KCGM and Yandal, pushing AISC to $2,246/oz and leading to revised full-year production guidance—the longer-term story remains intact. With a net cash balance of $181 million and liquidity above $1.1 billion, Northern Star is well-equipped to self-fund its two major growth projects: the KCGM mill expansion and the Hemi development. These initiatives are expected to lift group production beyond 2 million ounces annually by FY29. Based on a sum-of-the-parts valuation and using conservative gold price assumptions, we see a fair value of $24.50 per share—implying 15–20% upside. For investors looking through near-term volatility, Northern Star offers a rare combination of scale, jurisdictional safety, and exposure to a strong gold market. --- Northern Star Resources (ASX: NST) has been a standout in our portfolio, delivering a massive +109% return since we first recommended it. Over the past year alone, the stock has continued to shine, climbing between +38% and +44%. The momentum has been backed by a string of strong operational and financial results. In the first half of FY25, the company delivered record revenue of $2.87 billion, a 28% increase year-on-year, with underlying EBITDA up 58% and statutory NPAT soaring 155%. Gold sales rose modestly, but the real boost came from a jump in realised gold prices, lifting average revenue per ounce to $3,562. Despite higher AISC at $2,105 per ounce, strong margins supported a record interim dividend and an active share buyback program. The acquisition of De Grey Mining also adds serious firepower to the growth story, with the world-class Hemi gold discovery now under Northern Star’s belt. We continue to view Northern Star as a high-conviction, long-term buy. Its portfolio of large-scale, long-life gold assets in Tier 1 jurisdictions, Western Australia and Alaska, positions it as a top-tier global gold miner. The De Grey acquisition is a game-changer, adding depth to its resource base and a clear path for production growth over the coming decade. Even after such strong share price gains, we see further upside supported by strong free cash flow, disciplined capital management, and a clear growth pipeline. Management’s focus on shareholder returns is evident in both its growing dividend profile and continued buybacks. With a net cash balance and operational momentum, Northern Star is well-positioned to keep delivering for shareholders.

Northern Star Resources posted a robust first-half result in FY25, highlighting the company’s considerable leverage to high gold prices. Revenue rose 28% year on year to $2.87 billion, driven by a sharp increase in the average realised gold price to $3,562 per ounce. That topline strength translated to significant gains further down the income statement, with underlying EBITDA climbing 58% to $1.4 billion and net profit after tax more than doubling to $511.5 million. These figures affirm Northern Star’s capacity to generate meaningful earnings in a supportive commodity environment. However, the March quarter marked a reversal of momentum. Operational difficulties at KCGM’s Golden Pike North, where lower productivity delayed access to higher-grade ore, combined with unplanned maintenance at Yandal, pushed the group’s AISC to $2,246 per ounce. Management responded by downgrading FY25 production guidance to 1.63–1.66 million ounces and lifting cost expectations. While the revisions temper the near-term outlook, they do not undermine the structural investment case, which remains firmly intact and tied to longer-term project delivery. A Well-Capitalised Balance Sheet Enables Self-Funding of Strategic Expansion Projects One of Northern Star’s core strengths lies in its balance sheet. As of March 2025, the company held a net cash position of $181 million and total liquidity of more than $1.1 billion when accounting for bullion holdings. This financial flexibility is particularly important given the concurrent execution of two capital-intensive initiatives: the KCGM mill expansion and the development of the Hemi gold project, acquired through the recent $5 billion all-stock transaction with De Grey Mining. The group’s ability to generate free cash flow even amid operational pressures features its financial resilience. In the March quarter alone, free cash flow totalled $201 million, despite elevated sustaining and growth capital expenditure. This liquidity profile affords the company the capacity to proceed with its organic growth pipeline without needing to dilute shareholders or overextend its capital structure, an increasingly rare feature among global mid-cap miners navigating inflationary cost pressures. Structural Tailwinds in the Global Gold Market Reinforce the Long-Term Investment Case The external environment remains highly supportive for gold producers, with prices continuing to trade near record highs. The spot price of gold recently exceeded US$3,300 per ounce, equivalent to over $5,000, driven by a combination of sustained central bank buying, geopolitical instability, and a weakening outlook for real interest rates. We expect gold to approach or exceed US$4,000 per ounce by mid-2026, citing stagflation risks and currency debasement as primary drivers. Northern Star, which has allowed its hedge book to roll off, now benefits from full exposure to spot gold prices. While this increases revenue volatility, it positions the company to capture more of the upside in a strengthening gold market. At the same time, a strong gold price also lifts royalty costs and can inflate input prices, underscoring the importance of operational discipline. Nonetheless, Northern Star’s positioning within Tier-1 jurisdictions such as Australia and the United States makes it a relatively lower-risk vehicle for investors seeking leverage to gold, with fewer of the political complications facing peers operating in less stable regions. Sum-of-the-Parts Valuation Highlights Embedded Growth and Re-Rating Potential Our valuation of Northern Star is based on a sum-of-the-parts approach, appropriate for a company with a diversified operating footprint and multi-asset growth pipeline. The intrinsic value of the business rests on its three producing hubs: Kalgoorlie, Yandal, and Pogo, as well as the significant optionality embedded in its two core growth projects, the KCGM mill expansion and the Hemi development. These projects, once online, will expand group production to over 2 million ounces per annum and materially lower unit costs. The KCGM expansion alone is expected to nearly double processing capacity to 27Mtpa by FY29 and lift output to approximately 900,000 ounces per year. Meanwhile, Hemi, a large-scale, low-strip, open-pit deposit in Western Australia, is forecast to produce over 500,000 ounces annually from FY28 and had an NPV of $2.9 billion prior to the acquisition. Taken together, these two assets will reshape the company’s cost structure, extend mine life, and provide the scale increasingly sought after by institutional investors. Using conservative long-term gold price assumptions between US$2,000 and US$2,500 per ounce, and a real discount rate of 5% to 8%, we derive a target price of $24.50 per share. This implies 15% to 20% upside to current levels. The valuation also assumes a forward P/NAV multiple approaching 1.0x, consistent with well-regarded producers operating in safe jurisdictions and progressing toward meaningful scale. As the company executes on project milestones and resolves current operational issues, we believe the market will begin to reprice the stock to reflect the embedded growth. Dual Growth Projects Will Define Northern Star’s Trajectory Over the Coming Years What differentiates Northern Star from most of its ASX and TSX-listed peers is the simultaneous development of two high-impact projects, KCGM and Hemi. These expansions are not simply incremental, they are transformative. Together, they are set to lift production well beyond the 2-million-ounce annual threshold. That scale could reposition Northern Star as one of the world’s leading standalone gold producers, alongside the likes of Newmont and Barrick, but without the emerging market baggage. To be clear, managing two capital-intensive projects alongside ongoing operations introduces considerable execution risk. The recent challenges at KCGM are a reminder that even well-understood assets in well-regulated jurisdictions are not immune from disruption. However, Northern Star’s operational track record remains credible. The integration of Saracen and the turnaround at Pogo both demonstrated management’s ability to navigate complexity. If the company can replicate that track record with Hemi, and bring KCGM online on time and on budget, the long-term value creation will be substantial. Reiterating Our Buy Rating with a Medium-Term Focus on Execution and Delivery We reiterate our BUY recommendation on Northern Star Resources, with a price target of $24.50 per share. While operational challenges in FY25 have introduced near-term uncertainty, we view these as manageable rather than systemic. The strength of the company’s balance sheet, the scale of its resource base, and the strategic merit of its two major projects all support a constructive view on the shares. That said, the coming quarters will be critical. Investors will want to see tangible evidence of improved productivity at KCGM and disciplined progress on both the Hemi development and the KCGM mill expansion. If management can deliver on these fronts, we believe the stock is positioned for a material re-rating. Northern Star’s appeal lies in its ability to combine gold price leverage with scale, jurisdictional safety, and long-term growth. That combination is rare and currently available at a discount to intrinsic value. For long-term investors prepared to look through the noise of a difficult quarter and focus on the fundamentals, Northern Star remains one of the most compelling names in the global gold sector.