Northern Star (ASX:NST) Drops 9% on Production Cut: Time to Buy the Dip?

ASX Gold Stock in Focus: Northern Star Selloff Explained

Northern Star Resources (ASX: NST) fell 8.6% to close at A$24.43 on Friday, making it the worst performer on the ASX 200 to start 2026. The selloff came after the gold miner revealed a string of operational problems that forced it to cut FY26 production guidance by 100,000 ounces. Despite the sharp drop, the stock remains up roughly 73% over the past 12 months, which raises an important question: Is this a buying opportunity after a monster run, or a warning sign that execution risks are mounting?

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What Went Wrong at Northern Star?

The December quarter was hit by what management described as “a number of isolated negative events” that all happened at once. The main culprit was a primary crusher failure at the Kalgoorlie processing plant, which took operations offline for four weeks. On top of that, previously disclosed issues at Jundee and South Kalgoorlie cut production by around 20,000 ounces. Thunderbox also faced lower grades and processing downtime, while Pogo in Alaska dealt with dilution-related grade problems.

The result? December quarter sales came in at around 348,000 ounces, well below analyst expectations of roughly 410,000 ounces. That shortfall forced Northern Star to revise its full-year guidance down to 1.6-1.7 million ounces, from the previous range of 1.7-1.85 million ounces.

Here’s the key concern: lower production across all three production centres means higher costs per ounce. Northern Star has flagged that revised cost guidance will be released alongside its quarterly results on 22 January 2026. We expect all-in sustaining costs (AISC) to come in higher than originally forecast, which could squeeze margins even with gold prices near record highs.

Gold Prices Remain Strong – But Execution Matters More

Here’s what makes this situation tricky. Gold is trading near record highs above US$4,300 per ounce, which should be great news for miners. Northern Star’s profits are directly tied to the gold price, so elevated prices provide a nice safety net.

But strong gold prices only help if you can actually get the gold out of the ground efficiently. The market is telling us that execution matters just as much as commodity prices right now. Investors want to see Northern Star prove it can hit its targets before they reward the stock with higher prices.

The Investor’s Takeaway for Northern Star

For long-term investors, Northern Star’s recent selloff looks more like a temporary setback than a lasting problem. BMO Capital still sees upside, with a price target of A$31.00 (about 27% higher than current levels). The company also trades at a low PEG ratio of 0.28, showing strong financial health.

Caution is warranted, though. UBS downgraded the stock to Neutral, citing productivity issues at the Super Pit and delaying its forecast for the Hemi project to 2028. Continued hiccups could weaken investor confidence.

The A$1.5 billion Kalgoorlie expansion remains the key milestone. Success here could restore sentiment, while setbacks may trigger more selling.
Overall, this looks like a short-term issue. With gold prices near record highs and a solid balance sheet, the long-term case is intact. Still, waiting for the management update call on Monday, 5 January, and the full quarterly report on 22 January seems sensible.