Northern Star Resources takeover defences grilled as stock plunges again on buckling Super Pit mill

Shareholders in Australia’s biggest gold miner have been left reeling and questioning their vulnerability to a cheap takeover after learning of more crucial processing issues they thought had been fixed.

Northern Star Resources chief executive Stuart Tonkin told analysts on an impromptu call on Friday morning that it was “as disappointing for us” as it was for the miner that it would struggle to hit already-reduced guidance of 1.6 million ounces of gold for the year.

“To be sitting here as soon as now saying things haven’t gone well, I get it. It’s just as disappointing for us as this audience, and we’ve got to learn from that,” Mr Tonkin said.

Tending to relentless and costly unplanned maintenance issues at its revenue-driving mine — the famed Super Pit in Kalgoorlie — as fellow listed goldies generate cash bounties out of the once-in-a generation gold boom has put pressure on Northern Star’s stock and operational performance.

A $1.5 billion replacement for the Fimiston mill – which Northern Star has now revealed will be about 2 million tonnes short of its throughput target for the year – is not due to start commissioning until July.

Northern Star has been furiously directing more labour resources to make sure the new plant is ready on time so it can switch off the troubled existing one, with about 800 people on the replacement project.

Adding more complexities to the mix, the miner also revealed on Friday it was also taking a look at its Jundee operation, telling the market it was becoming harder and more expensive to maintain the open-pit and underground mines economically.

“The current plant at Jundee is going to get harder and more expensive and more intensive. So let’s intervene now and look what it looks like in the coming years,” Mr Tonkin said.

Investors who thought the extent of the miner’s operational woes had already been made clear in recent months were blindsided by Friday’s update. The stock closed 18.75 per cent in the red at $21.75.

Mr Tonkin did not confirm or deny whether it had received any takeover approaches this current financial year, but indicated it was a risk when questioned about the company’s underperformance and what it was doing to shield itself from being taken over on the cheap.

“I seem to feel more vulnerable with this. And so these are things and questions we’ll be looking at discussing with our board,” Mr Tonkin said.

“Absolutely, we’ve got to knuckle down and perform. Our attitude around this is, we see enormous long-term value, so we’ve got to work to restore that and build that up.

“I won’t comment on vulnerability or otherwise or takeover risks, but my attitude is, we’ve got work to do. We know what we’re doing. It’s going to take some time, and it’s something the board takes seriously and reviews.”

WA company director Michael Chaney has been chair of Northern Star since 2021.

The owner of Kalgoorlie’s famous Super Pit warned investors that its current “best estimate” would be above 1.5 million ounces as the company ploughs all its resources into ensuring a smooth transition to an upgraded mill right next to its old one.

Coming in anywhere under 1.561moz would mark its worse performance since FY22 — the same year it merged with Saracen Mineral Holdings.

It’s the third downgrade for Northern Star in six months, having already docked guidance for FY26 to between 1.6moz and 1.7moz — down from an earlier forecast of between 1.7moz and 1.85moz.

“It remains the case that the company faces significant ongoing operational challenges particularly given the difficulty of maintaining throughput at required levels through the existing mill at KCGM,” the miner said.

“March quarter-to-date gold sales for the group have been affected by a combination of weaker-than-planned milling performance at KCGM and reduced mining productivity across several operating areas, particularly at Jundee.

“Total gold sales for January and February were 220,000oz.”

The Fimiston mill expansion will more than double throughput to 27 million tonnes a year and deliver 900,000oz by FY29 following a two-year ramp-up due to start later this year.

Mr Tonkin said the miner’s focus over the next four months would be to set the company up to “achieve its full potential” from the start of the new financial year and not on the “achievement of short-term guidance above all else” as it transitions to the new plant.

“The production focus over this period will be on extracting ounces in the most effective way, from both a cost and mining efficiency perspective,” he said.

Mr Tonkin also aimed to head off shareholder unease over the changing guidance.

“We have heard the clear feedback from our investors on the importance of a more granular understanding of medium-term production, cost and capital outlook for our asset base,” he said, adding plans to release these would come before the end of the year.