Northern Star shares rise as Citi sees improved outlook
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The news: Northern Star was one of the best performing stocks on the ASX 200 in morning trade after Citi analysts lifted their outlook on the gold miner following a visit to its Kalgoorlie Consolidated Gold Mines (KCGM) project in Western Australia.
The numbers: Northern Star shares were up 3.3% to $16.70 at 11:20am AEST, taking 12-month gains to around 17.8%. The wider materials sector was up 1.4%.
Citi remained 'neutral' rated on Northern Star and kept its target price unchanged at $18 per share.
However, analysts raised expected gold price forecasts by $200 per ounce to $3,000 per ounce in the second half of the 2025 calendar year. They also lifted their FY27 production estimate by 3%, moving into the lower range of the miner's guidance.
The context: Following a visit to Northern Star's KCGM operations, Citi analyst Kate McCutcheon noted the miner still expects processing costs to come down by a third when the site's mill expansion is complete. FY25 processing costs averaged $33 per tonne.
Northern Star also told the analysts that KCGM's two-year ramp-up from FY27 is "conservative". Underground development of 28,332 metres in FY25 exceeded expectations of 24,000 metres, and is expected to ramp to between 36,000 and 40,000 metres in FY26.
What they said: "We always come away from KCGM site visits positive; the scale of the operation, resource upside and processing cost-out post mill expansion in FY27 look attractive," said McCutcheon.
The source: Citi research
