Florida-based activist fund Elliott Management has urged Australian gold giant Northern Star Resources to consider putting itself up for sale, citing what it calls “years of mismanagement.” Elliott, which manages approximately A$112 billion, confirmed it has amassed a position “well over A$1 billion” in the company. Northern Star Resources is Australia’s largest gold miner, involved in the exploration, development, and production of gold across various projects. The activist investor’s call comes after a series of production downgrades saw Northern Star’s share price decline significantly.
In a 39-page presentation titled “Northern Star Rising,” Elliott highlighted the gold miner’s 200 per cent underperformance against its peers and noted four reductions in production guidance over the past three months. The fund asserted that “the market views Northern Star as a poor operator with a pattern of operational missteps and repeated failures to execute capital projects on time and on budget.” Beyond a sale, Elliott also called for an immediate operational review, changes in leadership, and the hiring of new directors with “fresh perspectives,” following the resignation of CEO Stuart Tonkin in April.
Northern Star’s market capitalisation has fallen from a peak of A$44 billion in February to A$26 billion, primarily due to these production challenges and the announcement that its key Hemi mine would not produce gold until 2030, three years later than initially projected. Elliott pointed to a considerable “valuation gap,” noting Northern Star’s price-to-net-asset-value multiple is 55 per cent below the peer average. The fund, known for its successful 2017 campaign against BHP, states that Northern Star “owes it to its shareholders to promptly explore all strategic alternatives, including a sale of the company.” This move could set Elliott against influential director Michael Chaney, who joined the board in 2021.
