Why fund managers still back Northern Star Resources' growth profile

Gold producer Northern Star Resources delivered a record FY25 financial result even as its FY26 production guidance disappointed the market, with Yarra Capital Management's August 2025 Monthly Report detailing revenue of $6.4 billion and net profit more than doubling to $1.3 billion, while lifting its dividend to 30 cents a share, a result the manager attributed to what it considers the most robust organic production growth profile in the gold sector.

A transition year overshadowed by KCGM's mill expansion

Tyndall Asset Management's July 2025 Monthly Report detailed the source of the initial disappointment: FY26 projections featured slightly reduced volumes alongside elevated production costs and growth capital expenditure, even as the manager continued to see substantial value from underground development ramping up, KCGM's reconfirmed target of 900,000 ounces annually by FY29, and the unwinding of the company's hedgebook increasing exposure to spot gold prices. Pendal Group's October 2025 Newsletter detailed the centrepiece of that growth story: the KCGM mill expansion from its current 13 million tonnes per annum to 27 million tonnes per annum, remaining on track for commissioning in early FY27 and expected to deliver a step change in production and free cash flow.

Antares Capital's September 2025 Monthly Report detailed a relief rally following site visits to the company's Western Australian operations, with the market coming away more comfortable on the cost and capex outlook after a series of recent disappointments in that area. Ten Cap's September 2025 report detailed rotating gold exposure from Newmont into Northern Star specifically to capture relative value, viewing the recent production downgrades as temporary ahead of an expected normalisation in operational performance.

What managers are watching next

Pendal Group's September 2025 report offered a useful comparison point, noting the fund's primary gold exposure through Evolution Mining had a higher free cash flow yield than Northern Star, even though Northern Star's production growth outlook was considered superior, illustrating the trade-off managers weigh across the sector. With the KCGM mill expansion and the Hemi project both representing major medium-term production catalysts still to be delivered, the pace of execution on both remains the central factor for managers assessing whether Northern Star's premium growth profile justifies its valuation relative to gold sector peers.