Image source: © 2025 Krish Capital Pty.Ltd

Highlights

  • Northern Star reported FY25 revenue of A$6.41 bn, with net profit of A$1.34 bn.
  • FY25 dividend reached A$0.55 per share, alongside a A$300 mn share buy-back.

Macquarie Research has maintained an Outperform rating on Northern Star Resources Ltd (ASX:NST) throughout 2025, despite the gold miner trimming production guidance earlier this year. Across recent notes, the broker has argued that Northern Star’s long-term fundamentals and project pipeline outweigh near-term noise, supporting price targets of A$27 in July and later A$24 in August. Both targets implied upside from prevailing share price levels at the time.

Growth Anchors in Macquarie’s Framework

Macquarie’s conviction is built on four consistent pillars:

  1. Growth runway – a multi-year expansion path supported by brownfields optimisation and the De Grey (Hemi) acquisition.
  2. Scale leverage – benefits from the KCGM mill expansion, designed to lower unit costs while lifting throughput.
  3. Portfolio quality – diversification and a balance sheet that mitigates single-asset risk.
  4. Gold macro tailwind – higher long-term gold price assumptions and sector reratings benefiting liquid, Tier-1 operators.

This framing has allowed the broker to reiterate Outperform even as guidance reductions drew market scepticism.

De Grey Mining (Hemi): The Strategic Bolt-On

In May 2025, Northern Star completed the acquisition of De Grey Mining, securing the Hemi ore body in Western Australia. Macquarie views the deal as accretive across production, reserves, and net asset value (NAV).

  • Shareholder mix: De Grey holders now own ~20% of the combined company but contribute ~22% of pro-forma reserves and ~21% of FY29 output, with a ~4% all-in sustaining cost (AISC) reduction compared to standalone Northern Star.
  • Cash contribution: The acquisition also delivered ~A$0.7 bn in cash, improving balance-sheet flexibility.
  • Production trajectory: Analysts estimate the enlarged portfolio can underpin a run-rate of more than 2.5 Moz per annum by the late 2020s, reshaping Northern Star into a larger, lower-cost producer.

KCGM Expansion: Scale and Optionality

The Kalgoorlie Consolidated Gold Mines (KCGM) mill expansion remains central to Northern Star’s rerating story. Approved earlier, the A$1.5 bn project aims to double mill capacity, add ~250 koz of annual output, and lower processing costs by about A$7 per tonne.

Macquarie ties the Outperform rating directly to KCGM execution:

  • Operating leverage – spreading fixed costs across larger output magnifies margins in a favourable gold price environment.
  • Synergies with Hemi – expanded processing optionality enhances project sequencing and procurement flexibility.
  • Market signalling – successful delivery of a marquee project demonstrates execution capability, often rewarded with valuation multiple expansion.

While FY25 guidance cuts were linked to operational issues at KCGM, Macquarie’s notes emphasised that long-term expansion logic remains intact.

FY25 Financial and Operating Results

Northern Star’s FY25 financials, released in August 2025, showed growth despite cost inflation:

  • Revenue: A$6.41 bn (FY24: A$4.92 bn)
  • Net profit after tax: A$1.34 bn
  • Underlying free cash flow: A$536 mn, up ~16% year on year
  • Cash earnings: A$2.87 bn

Gold sold was around 1.63 Moz, up slightly from FY24. The average realised gold price jumped from A$3,031/oz in FY24 to A$3,922/oz in FY25, helping offset higher costs in labour, maintenance, energy, and royalties.

The company returned capital via a record FY25 dividend of A$0.55 per share and completed a A$300 mn on-market share buy-back at ~A$11.04 per share. Northern Star closed FY25 with net cash of ~A$1.0 bn and liquidity of about A$1.9 bn.

Macro Environment: A Supportive Gold Backdrop

Gold entered 2025 with upward momentum, supported by geopolitical uncertainty and rate expectations. Several brokers, including Macquarie, lifted long-term price assumptions during Q3. In such an environment, scalable, liquid Tier-1 producers benefit disproportionately.

While mega-caps and ETFs often capture early inflows, analysts see outsized equity returns in mid-to-large producers with credible growth pipelines. Macquarie shifted its top gold pick back to Northern Star in mid-2025, citing relative valuation and clearer long-term earnings power.

Risks and Watchpoints

Macquarie’s ongoing coverage highlights several risks:

  • Execution risk at KCGM and Hemi (delays, budget overruns).
  • Cost inflation in labour, energy, and consumables.
  • Commodity risk if gold prices weaken materially.
  • Integration and permitting for Hemi, although mitigated by Western Australia’s stable jurisdiction.

The broker has trimmed its target (A$27 to A$24) to reflect these uncertainties, but the rating remains Outperform.

Not investment advice. Always do your own work—especially on commodity and project-execution risk.