Elliott takes A$1-billion stake in Australia's Northern Star, calls for strategic review
MELBOURNE - Shares in Australia's biggest gold miner Northern Star Resources jumped on Tuesday after activist investor Elliott Investment Management disclosed an over A$1-billion ($714.6-million) stake and called for it to launch a strategic review that would consider a sale.
The US-based investor cited Northern Star's underperformance versus peers, "repeated operational missteps", seven outlook misses in four years, and "deeply inadequate disclosures compared to global senior peers," in a statement.
Elliott has taken a position of more than 4% in Northern Star, which has a market value of about $19-billion, as the company readies for a leadership change following four downgrades to production and cost guidance so far this year.
With that stake, it would count among the miner's top five shareholders, according to LSEG data.
Northern Star MD Stuart Tonkin last month announced his resignation, effective in the first quarter of 2027, after 13 years, without a successor named.
Northern Star said in a statement that it welcomed constructive dialogue with Elliott. The hunt for a new CEO, run by an international search firm, was underway and discussions with potential candidates were already taking place, it said.
The miner added that it regularly reviewed potential broader merger and acquisition opportunities with its financial adviser, Goldman Sachs.
Northern Star's share price rallied 13.7% on Tuesday, paring prior losses of more than 25% this year, compared to peers Evolution Mining and Perseus Mining, which had dropped 2% and 8%, respectively.
The bid comes against a backdrop of gold prices that have eased by around a quarter from records hit earlier this year, and at a potentially lucrative point in the cycle as cash-rich gold miners pursue mergers and acquisitions for growth.
“The company does need to be shaken up,” said portfolio manager Brenton Saunders of Pendal Group in Sydney, who added he agreed with many of Elliott’s points. “Their (Elliott’s) MO is usually very effective, if somewhat unorthodox.”
STRATEGIC REVIEW
Elliott, which ran a high-profile activist campaign at Australian miner BHP Group a decade ago, described a clear path forward for Northern Star, focused on conducting a strategic review to assess the miner's market value in tandem with an external CEO search and a process to improve operations.
The fund said it would push for a CEO to be in place by October, a board refresh, and the prompt exploration of all strategic alternatives, including a sale of the company.
"Northern Star's recent pattern of operational missteps, cost overruns and inconsistent strategic direction demands urgent action," Elliott said.
Elliott said first-round bids in a strategic review could come as soon as July, with a transaction announced as soon as December, or new targets could be announced at an investor day as early as December should the board prefer to turn the company around.
Over the past year, Northern Star has faced several setbacks at its Kalgoorlie gold operations in Western Australia, and it said achieving the lower end of its fiscal 2026 production guidance would be challenging.
In its presentation, Elliott, which manages nearly $79.8-billion in assets, said Northern Star should also buttress its board with directors with operational expertise in gold mining.
Elliott also said Northern Star's valuation materially understated the quality of its underlying assets, which it said would be a "great fit" for some of the world's biggest listed gold mining companies.
The investor described the Kalgoorlie mine, known locally as the "Super Pit", as potentially one of the world's largest gold mines and Northern Star's Hemi project in Western Australia's north as among the most attractive greenfield gold projects in the developed world.
The Australian Financial Review first reported on Elliott's stake in Northern Star on Monday.
