Northern Star Resources Ltd (NESRF) (H1 2026) Earnings Call Highlights: Record EBITDA and ...
Northern Star Resources Ltd (NESRF) reports a 34% increase in underlying EBITDA and outlines future growth with the KCGM mill expansion and Hemi project.
This article first appeared on GuruFocus. Underlying EBITDA: $1.9 billion for the first half of FY26, up 34% from the previous corresponding period. Underlying Earnings Per Share: $0.53, a growth of 19% over the prior corresponding period. Cash Earnings: $1.1 billion for the first half. Interim Dividend: $0.25 per share, fully franked. Net Cash Position: $293 million as of December 31. Liquidity: Totaling $2.7 billion, including $1.5 billion of undrawn facilities. EBITDA Margin: 55% for the period. Return on Capital Employed: Underlying earnings before interest and tax up 47% to $1.1 billion.
KCGM Mill Expansion: Project build 86% complete, on track for early FY27 commissioning. Capital Investment for KCGM: Increased to $1.65 billion to $1.69 billion. Warning! GuruFocus has detected 4 Warning Sign with NESRF. Is NESRF fairly valued? Test your thesis with our free DCF calculator. Release Date: February 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Northern Star Resources Ltd (NESRF) reported a record underlying EBITDA of $1.9 billion for the first half of FY26, marking a 34% increase from the previous period.
The company declared a fully franked interim dividend of $0.25 per share, reflecting strong cash earnings of $1.1 billion. The KCGM mill expansion is on schedule for commissioning in early FY27, which is expected to significantly enhance cash generation and return on capital employed. Northern Star Resources Ltd (NESRF) maintains a strong balance sheet with a net cash position of $293 million and significant liquidity totaling $2.7 billion. The company has a diversified portfolio with a pipeline of options that underpin long-term value creation and returns for shareholders. Negative Points The company experienced a soft operational performance in the second quarter, impacting underlying free cash flow.
Yandal production center faced disruptions and higher operating costs, affecting margins during the period. The Hemi development project is facing delays in approvals, potentially pushing the final investment decision to FY27. There are concerns about the reconciliation of grades at some of the Yandal mines, which could impact medium-term mine plans. The company is facing challenges in stabilizing KCGM billing performance until the transition to the new plant is complete. Q & A Highlights Q: Can you expand on the major works outstanding for Hemi approvals and the risks to the timeline?
A: Stuart Tonkin, CEO: The final investment decision for Hemi is not to be rushed. We are anticipating the timing to reprice the capital and present it in the business case. Primary approvals are expected this quarter, with public comments and regulator feedback ongoing. Secondary approvals, like dewatering, are planned for this calendar year. The timing is uncertain, but we aim for a decision during this financial year, ideally post-KCGM commissioning, to leverage learnings and cash flow from KCGM for Hemi. Story Continues Q: Is there a delay anticipated between KCGM's mill expansion and Hemi's final investment decision?
What would the business do with the cash generated during this period? A: Stuart Tonkin, CEO: The timing of KCGM's full operation and Hemi's investment decision may overlap. The balance sheet is healthy, and we are not concerned about funding Hemi. If there is surplus cash, capital management options will be considered by the Board. Q: Regarding Hemi's resource update in May 2026, what changes might we expect in terms of grade and assumptions? A: Stuart Tonkin, CEO: We will adjust the gold price across the group and apply stricter views on mining shapes and scrutiny. Recent infill drilling has improved resource classification and confidence.
The update will blend these factors to ensure a robust case for investment. Q: Can you provide more details on KCGM's production outlook post-expansion, particularly for FY27? A: Stuart Tonkin, CEO: The production range for FY27 is narrow due to confidence in the build and grade. The best grade material will be processed first, with low-grade stockpiles as a buffer. We will update guidance later this financial year as we refine delivery schedules and stockpile assessments. Q: How is the grade performance at KCGM, and what are the mining volumes like? A: Stuart Tonkin, CEO: We are extracting high-grade material from Golden Pike North, with a large stockpile ready for milling.
Mining volumes have been strong, with record tonnage movements, indicating efficient operations. The focus is on managing disruptions until the cutover. Q: Why did you decide to go above the dividend policy range for the first half? A: Stuart Tonkin, CEO: We consider dividends on a full-year basis. Despite exceeding the policy range in the first half, we anticipate a strong second half, which should align with our policy over the full year. Q: With Hemi's timeline extended, have you considered pre-delivering into your hedge book to unlock free cash flow earlier? A: Ryan Gurner, CFO: While it's a consideration, it's unlikely at this stage.
We aim to remain flexible, but additional cash flow will be evaluated as it arises. Q: Will the KCGM expansion impact the upcoming resource update by bringing new ounces to life? A: Stuart Tonkin, CEO: The impact will be seen in later iterations. We are evaluating the cutoff grade for material currently classified as waste. Future updates will consider the economic viability of lower-grade material as milling costs decrease. Q: Can you update us on the grade reconciliation work at Yandal mines and the medium-term mine plan? A: Stuart Tonkin, CEO: Orelia pit is reconciling well, contributing significantly to feed.
We are monitoring underground sources and new developments at Jundee, which should enhance grade reconciliation and overall production. Q: Is Northern Star open to further acquisitions, or are you focusing on organic growth? A: Ryan Gurner, CFO: We are focused on organic growth and operational improvements, particularly with the KCGM expansion and Hemi project. Our priority is maximizing returns on deployed capital. For the complete transcript of the earnings call, please refer to the full earnings call transcript.