NST shares steady today as margins hold up despite higher AISC
Northern Star Resources (NST) is trading broadly flat around A28.26, only modestly under its average broker target of about A30, after a mixed half-year that combined sharply higher realised gold prices with materially higher costs. The stock is lagging the more upbeat earnings…
Segment profitability remains skewed to Kalgoorlie, where improved throughput and the KCGM expansion underpin a 63% EBITDA margin, while Yandal and Pogo sit at 49% and 53% respectively. That mix, combined with the higher price deck, supports strong group cash earnings of A1.10bn, only 4% below the prior period despite lower production.Today’s move follows Northern Star’s 1H FY26 result, where underlying EBITDA rose 34% and underlying NPAT 49% despite a 29% jump in group AISC to A2,720/oz. Northern Star shares hold as higher gold price offsets AISC pressure. Revenue increased 19% to A3.41bn, driven by a 31% lift in the average realised gold price to A4,670/oz, which offset a 9% reduction in gold sold to 729koz. Underlying EBITDA climbed to A1.88bn and margins expanded to 55% from 49%, showing the pricing tailwind is still strong enough to cushion cost inflation. Group AISC rose to A2,720/oz from A2,105/oz, reflecting higher underground and open-pit activity, labour and contractor inflation, increased processing maintenance and royalties on the higher gold price. The company also lifted FY26 AISC guidance to A2,600–2,800/oz, with Kalgoorlie now at A2,450–2,650/oz, Yandal at A3,000–3,350/oz and Pogo at US1,600–1,700/oz, implying tighter near-term unit margins until volume growth arrives. Cash flow from operations fell 18% to A1.03bn, with underlying free cash flow of A320m after A1.19bn in mine and plant capex and A113m in exploration, as the company leans into growth at KCGM and Hemi. An interim dividend of 25c per share, now fully franked, was declared, consistent with the 20–30% of cash earnings payout framework and supported by a franking credit balance of A221m. Capital and financial position Northern Star closed the half in a net cash position of A293m, with A1.18bn of cash and bullion and US600m of senior notes drawn, giving total liquidity of about A2.7bn including undrawn revolving bank facilities. Management continues to target leverage under 1.5x and gearing below 20%, with current metrics leaving ample capacity to fund the A1.65–1.69bn KCGM mill expansion, associated operational readiness capex and early spend on Hemi. What’s next… The near-term focus is on execution: stabilising production across all three centres, holding the revised AISC range, and delivering KCGM mill commissioning in early FY27 to structurally lower the cost base and lift margins. For investors, the key drivers over the next 12–18 months will be delivery against guidance after recent downgrades, evidence of improving unit costs, gold price sustainability around elevated levels, and milestones on KCGM and Hemi that de‑risk the path to “bottom-half of the global cost curve” status. CEO Stuart Tonkin summed it up by saying the first-half result “demonstrates the resilience and growing returns we are embedding in our business,” highlighting confidence that today’s elevated investment in KCGM and Hemi will translate into stronger cash generation and higher returns once the new capacity is online.
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