On June 2, Northern Star (ASX.NST) shares are 12% higher on a poor day for many Australian-listed gold miners after activist investor Elliott bought a 4% stake, pressing for change. Elliott’s primary goal is sale of all or part of the firm, or failing that, management and board changes to hasten turnaround.

Why it matters: Recent total shareholder returns generally trail those of peers no-moat Newmont, Barrick, Agnico Eagle, Kinross, Evolution, and Perseus, as well as Gold Fields and AngloGold Ashanti (both uncovered).

  • The underperformance is due to production issues led by its Kalgoorlie operations as it expands capacity at KCGM, higher-than-expected capital expenditure and all-in sustaining costs, or AISC, and numerous guidance downgrades.
  • As a result, shares trade at a material discount to peers based on consensus net asset value and enterprise value/EBITDA multiples. Elliott suggests the best way to reduce or eliminate this discount is to sell to a larger rival.

The bottom line: We keep our $15 fair value estimate for no-moat Northern Star, with shares now trading about 40% above our intrinsic assessment. Our other gold mining coverage is also materially overvalued.

  • This is likely driven by the market assuming the gold price stays elevated at about USD 4,500 per ounce rather than reverting to our assumed midcycle price of around USD 2,050 from 2030. This is based on our estimate of the long-run marginal cost of production.

Coming up: We think Northern Star is now in play. But while a sale would benefit its shareholders, we hope management of bigger rivals Newmont, Barrick, Agnico Eagle, and Kinross remain disciplined and don’t engage unless it makes financial sense for their shareholders.

  • While many of its peers have benefited from soaring prices for byproducts, including copper and silver—which have been a tailwind for their AISC and margins compared with Northern Star, which only mines gold—Elliott still has a valid point on its relative underperformance.

Activist Elliott Management puts Northern Star in play

Northern Star is a midtier global gold miner with mines in Western Australia and Alaska. Its portfolio is a result of significant corporate activity, including 14 acquisitions and four asset sales since 2010. Notable transactions include the purchase of Pogo in Alaska in 2018 and half of the Kalgoorlie Super Pit mine, or Super Pit, in Western Australia, from Newmont in 2020. Northern Star subsequently merged with Saracen in 2021, adding the other half of the Super Pit, as well as the Carosue Dam and Thunderbox assets in Western Australia.

We forecast Northern Star to increase gold sales from its existing mines to about 2 million ounces in fiscal 2030, up from 1.6 million ounces in fiscal 2025, driven by increased production at its Kalgoorlie operations in Western Australia. Roughly 60% of the company’s midcycle sales in fiscal 2030 come from its Kalgoorlie operations. At the end of fiscal 2025, the company had around a decade of reserves.

It bought developer De Grey Mining, owner of the attractive Hemi gold project in Western Australia, in May 2025. The development of Hemi, which we think likely, will add a further 500,000 ounces by around 2030, making Northern Star one of the largest gold miners in the world by production.

The company’s average all-in sustaining cost of about $2,160—around USD 1,400—per ounce for fiscal 2025 places it around the middle of the second quartile on the gold industry cost curve.

Northern Star focuses on buying and owning assets that have been undermanaged by their previous owners, whether due to strategic reasons or because they were relatively immaterial compared with the vendors’ other, larger assets. The company then aims to improve operations and grow production, as well as to increase reserves and mine lives through exploration and/or by acquiring nearby assets that can use the company’s existing processing facilities.

Bulls Say

  • The likely expansion in gold sales over our forecast period should keep Northern Star within the bottom half of the industry cost curve.
  • With its gold mines located in Australia and Alaska, Northern Star has relatively low sovereign risk.
  • Gold companies tend not to follow general economic cycles. They can also provide a hedge to inflation risk.

Bears Say

  • Future production is highly dependent on its Kalgoorlie production center, which represents around three-quarters of reserves at the end of fiscal 2025.
  • The company sits in the middle of the second quartile of the gold cost curve, but is still meaningfully leveraged to changes in the gold price.
  • Gold is subject to the whims of investors’ sentiment, who can move as a herd and affect the gold price.