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Operator: Thank you for standing by, and welcome to the Northern Star Fiscal Year '26 Half Year Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.
Stuart Tonkin: Good morning, and thanks for joining us to discuss our first half FY '26 financial results. We will be referring to the presentation as published on the ASX this morning. With me on the call today is our Chief Financial Officer, Ryan Gurner. This first half result demonstrates the resilience and growing returns we are embedding in our business. Our balance sheet remains in a net cash position, notwithstanding the significant investments we are making to transform Northern Star into a lowest half-cost global gold producer. Given our positive outlook for the company, the Board has declared a fully franked $0.25 per share interim dividend whilst recognizing a soft operating performance in the second quarter. The KCGM mill expansion remains on schedule for commissioning in early FY '27 with the actions of increasing labor being positive there. I want to assure our investors that Northern Star remains committed to improving our operating performance. Notwithstanding recent challenges, we reaffirm our commitment to operational excellence. We continue to prioritize medium-term production growth while advancing initiatives to reduce unit costs. Our diversified portfolio provides a pipeline of options that underpins long-term value creation and returns for shareholders. While today is about the half year financial results, I would like to briefly touch on the operational performances so far this year. At KCGM, milling performance is stabilizing, but will continue to be disruptive until we transition to the new plant. At Jundee, remedy works are expected to be completed this month in line with expectations with milling throughput normalizing and focus now turning to mine volumes and grades. Pleasingly, at Pogo, mine grades have increased, but I'd still like to see further improvement and focus on dilution. Our team remains firmly focused on driving productivity improvements and strengthening cost discipline to deliver a stronger second half for our shareholders. Before I hand over to Ryan, I would like to take this opportunity to thank our team for their efforts and commitments over 2025 as it was a challenging period. With that, over to Ryan, who will discuss the first half FY '26 results in more detail.
Ryan Gurner: Thanks, Stu. Good morning, all. I'll step you now through the first half financials. So I'd like to begin on Slide 4, which outlines our key financial metrics for the group, being the company delivering a record underlying EBITDA of $1.9 billion for the first half of FY '26, which was up 34% from the previous corresponding period. Underlying free cash flow was impacted by soft operational performance during Q2, tax payments relating to FY '25 and investment in our growth projects to drive our future cash flows higher. Looking ahead over the next 6 to 12 months, we expect free cash flow to improve with a stronger second half operational outlook, normalized tax payments and the commissioning of the KCGM mill expansion project in early FY '27. Adjusting for abnormal items, our underlying earnings of $0.53 per share grew 19% over the prior corresponding period, and we recorded strong first half cash earnings of $1.1 billion, which has enabled our Board to declare a fully franked interim dividend of $0.25 per share. Over to Slide 5. Our balance sheet supports our strategy and gives us flexibility through the cycle to fund opportunities that may arise to enhance our portfolio to deliver long-term superior shareholder returns. Our investment-grade balance sheet remains strong and in a net cash position of $293 million at 31 December. And we have significant liquidity totaling $2.7 billion, which includes $1.5 billion of facilities, which remain undrawn. Now Slide 6. As mentioned, we continue our strong track record of returning funds to shareholders with the Board declaring a fully franked interim dividend of $0.25 per share, totaling $358 million. The record date of the dividend is 5 March and payment date of 26th of March. A reminder that the company's dividend policy is 20% to 30% of full year cash earnings. Over to Slide 7, where we highlight the EBITDA margin achieved by the group for the half year ending 31 December and the preceding half year for each production center. All 3 production centers are achieving healthy EBITDA margins, resulting in a group margin of 55% for the period. Yandal Production Center experienced disruptions over the December quarter and higher associated operating costs, which impacted margins in the period. With these disruptions behind us, we expect margins to lift in the second half at this production center. Similarly, at Pogo, we are forecasting a lift in mining grades, which in turn will drive margin improvement over the second half of the financial year. And across the Kalgoorlie Production Center, our focus remains on completing the final stages of our mill expansion at KCGM with commissioning on track for early FY '27. This milestone will mark the beginning of a step change in returns and cash flow at this asset. Before I hand over to Stu to finish the presentation, I'd like to step you through Slide 8. It's pleasing to see our improving return on capital employed, which has been a focus since the merger in FY '21. We are confident this will continue to grow over the near term with stronger production forecast in the second half of this financial year as well as the commissioning of the expanded KCGM mill. This reflects progress on our multi-year strategy and focus on allocating shareholder funds to generate superior returns. It also highlights the strength of our first half underlying earnings before interest and tax, which is up 47% from the prior year to $1.1 billion. Thank you. I'll now hand back to Stu.
Stuart Tonkin: Thanks, Ryan. Turning to Slide 9. We're nearing completion of the 3-year build for our KCGM mill expansion, which remains on track for commissioning early FY '27. KCGM is positioning the business for a significant uplift in cash generation and return on capital employed from FY '27. This enhanced cash flow outlook strengthens our ability to deliver attractive returns on investment, supports capital management and allows us to advance further growth options in the portfolio. At the January quarterly call, we announced an increase to the project's total capital investment to $1.65 billion to $1.69 billion, reflecting a lower-than-planned rate of productivity and the addition of labor to keep the project on schedule. I'm pleased to report that we are seeing benefits to this additional labor at the end of January, and the project build was 86% complete on schedule. As we near the final stages to commissioning, labor levels will reduce. Turning to Slide 10. We continue to advance the Hemi Development Project in a disciplined manner. The state and federal permits continue to progress, which will then enable secondary approvals to be sought. I'd like to remind everyone that both primary and secondary approvals are required prior to early works commencing. And given some of that uncertainty and things out of our control, the approval of timing, we now expect final investment decision to be sometime during FY '27. With an estimated 2.5-year build, this corresponds to first gold being forecast for FY '30 at the earliest. This timing also allows our internal project team to smoothly transition following the completion of the KCGM expansion to focus on Hemi. Further, it provides time for our balance sheet to strengthen from the uplift of free cash flow at KCGM. Now to Slide 11. Slide 11 reiterates our revised FY '26 guidance as disclosed on the 22nd of January. We have also provided financial guidance at the bottom of the slide in green to reflect first half FY '26 actuals. To Slide 12. Northern Star's exploration program remains a highly attractive approach to value creation to support our purpose to deliver superior shareholder returns. And since March '22, our average cost of resource addition is a compelling $37 an ounce. We are in the enviable position where we have over 70 million ounces of mineral resources and 22 million ounces of ore reserves, excluding Hemi. This corresponds to over a 10-year reserve-backed production profile. And in May, we look forward to including the Hemi mineral resource and ore reserves into our group's annual statement. And finally, on Slide 13, our business is set for a structural uplift in portfolio quality over the coming years. The company cash flow is forecast to grow significantly with increased production, lower costs and lowering CapEx over the coming years. We are confident that our return on capital employed will increase as we bring on projects that are long life and low cost while improving stability and reliability of the assets in our portfolio today. Our balance sheet is strong and of investment-grade quality. We continue to review the portfolio to sustain high-margin production. Now that concludes the formal part of our presentation, and I'd now like to hand back to the moderator for Q&A.
Operator: [Operator Instructions] The first question comes from Daniel Morgan with Barrenjoey.
Daniel Morgan: Just on Hemi and approvals, can you just expand on -- I know approvals are an issue across the industry and the time lines tend to extend. But what are the major works that are outstanding on the approvals front? What are the major risks to the time line? And it appears that you are flagging that this is taking a little bit longer than expected, and it's just you're flagging that FID is going to potentially move back further into FY '27.
Stuart Tonkin: Yes. Thanks, Dan. I guess the final investment decision, we don't want to rush. We need adequate time to consider that. So we're really anticipating the timing and to reprice the capital, put that into the business case to present and consider. On the primary approvals, so state, we expect essentially this quarter, the submissions have been in the public comments being sought and returns of those -- that information for the regulators is there. The primary approvals on the federal EPBC, again, expecting that to be published for public comment soon. It will be a 4-week public comment period, and then there'll be iterations of request for information back and forth between the regulators. So we don't really control that time frame. The processes have those time locks that you enter into. So again, we expect that during this year, ideally this financial year, but we can't be certain on that process. And history has told us things do slip they don't go quicker. The secondary approvals around the dewatering and other clearances that we're working on. Again, we expect and plan for those things to occur this calendar year. And therefore, we just want that time to prudently go through and present that case to the Board. I think the couple of things I've said, which we would like to do, obviously, once the approvals and the timing is clear to us, we reprice the capital. That's what goes in with some pretty hard firm all-encompassing numbers into the financial case that is considered by our Board. And then ideally, that's subsequent to the KCGM commissioning. So learnings from KCGM can go across to Hemi and the cash flow generation from Hemi is generating to fund organically the growth of KCGM funds Hemi.
Daniel Morgan: And do you anticipate a delay between like -- well, KCGM coming on, the mill expansion and then the FID, like is there going to be a period of time? Do you anticipate of, say, 6 months or more where the business has the opportunity to generate significant free cash flow from the KCGM expansion? And then the second part of that question is just what would the business do with that period of cash harvest?
Stuart Tonkin: I think that the 2 will occur. The timing -- the balance sheet is already healthy net cash and that will grow so that we're not concerned around the funding aspects of Hemi or the profile of its spend. We're certainly not concerned around the considerations around hedging and those types of things we've spoken about that we needed to do for KCGM years ago. I agree that if there was a period of 6 months where KCGM is on full noise and we haven't been investing in Hemi, there's some surplus cash there. So all those capital management concepts will be considered by our Board, including all the usual aspects that we consider from time to time.
Daniel Morgan: And just last question, still on Hemi. You stated resources and reserves are going to be included in the update in May '26, which is from a Northern Star perspective. Can you just talk through what conceptual changes from De Grey we might expect, i.e., could it benefit from more drilling that you've undertaken, a potential change to the gold price assumption? Or might there be more conservatism around mining shapes and the fact that you're actually going to be delivering an operational project rather than a concept?
Stuart Tonkin: I think a blend of everything there, Dan. We certainly will adjust gold price across the group, reflecting where our costs are and where the spot is. It will still be modest. There'll still be a lot of headroom to spot prices and long-term forecasts. We probably have stricter views on mining shapes and scrutiny, wall angles, all those things on the resource. So certainly be a stricter cut on some of the designs. There has been some infill drilling occurring, which is really around the classifications and confidence of the resources there. So that's what we have been doing in recent months. So a blend of all that, pluses and minuses. We're trying to make this as bulletproof as we can for the consideration for entry into FID.
Operator: The next question is from Matthew Frydman with MST Financial.
Matthew Frydman: Can I ask a question on Slide 9 there where you've reaffirmed some guidance you've given previously on what KCGM looks like post the expansion and the ramp-up. Maybe just starting with the FY '27 range, 750,000 to 800,000 ounces. That seems like a pretty narrow range given obviously some uncertainties around commissioning and the cutover period and all that sort of stuff. Is it right to think that the -- I suppose, the marginal tonne of feed into KCGM in FY '27 is going to be low-grade stockpiles. And so therefore, that the actual production impact from some of those risk factors like the exact timing of the cutover or the pace of the ramp-up isn't as significant? Or I guess to put the question another way, is the real driver of your production in FY '27 and over the medium term at KCGM more about the high-grade material from the pit and the mining sequence, which is ultimately why you're comfortable with that fairly narrow range. I hope that is sort of a clear question.
Ryan Gurner: Yes, it is. The -- yes, the outlook is -- it's narrow for the asset. I appreciate that. The concept is that the best grade goes in first and that if there's any throughput reduction either through later commissioning and/or greater planned or unplanned downtime throughout the year and 23 million tonnes wasn't met that the last 1 million tonnes is that 0.6 low-grade stockpile. So the incremental grade incremental ounces are minimal. And then any of the main primary Golden Pike higher-grade material plus the underground Fimiston, Charlotte material is milled that goes first. And then that's the buffer and thinking. We'll obviously update FY '27 guidance later this -- or end of this financial year such that we've got delivery schedules, planned, stockpiles as we have -- there's 82 million ounces stockpiled on the ROM there in the last month. That gives us the greater confidence of how narrow that band could be. But you're right in saying it's less about the overall throughput. That's more a sign of the confidence that the build is correct as opposed to the grade going into it.
Matthew Frydman: Okay. Got it. And then I guess in that vein is -- halfway through the quarter, is there any more info that you can give us in terms of how that grade performance is coming out of the pit. Ultimately, what the bottom of the pit looks like now that it's fully destacked, et cetera? Any sort of incremental update since the quarterly would be appreciated.
Stuart Tonkin: Yes. We believe we're still pulling that sort of 1.8-gram material high grade out of the Golden Pike North. As I said, we've got a large stockpile of that material on the ROM in front of the mill. It's been the mill that's held us up with that unplanned disruptions. So really, it's a game of just keeping that managed along until the cutover. But yes, the mining volumes, and we've had some record tonnage movements over the period. So it's been great to see not just ore but ore and waste in that fleet being very efficient. There's about 8 million tonnes moved in January, which again is well above the rate that we forecast there. So very happy with the mining activity. And the grade, we always -- until it goes through the mill intensity into a gold bar, that's the element we -- it's all theory until it goes through based on that drilling.
Operator: The next question is from Adam Baker with Macquarie.
Adam Baker: Just firstly, on dividends. It looks like it's around 33% of cash earnings for the first half. Was this just a driver from your considerations of expected stronger second half? Or -- just keen to hear your thoughts on why you elected to go above that range for the first half?
Stuart Tonkin: Yes. Thanks, Adam. Look, we look at it on a full year basis. So we're aware of where it sits against policy in the half. But again, given we had a very strong second half forecast and outlook, we believe that we'd stay within that band and policy over the full year. We'll obviously consider that on the full year results, but we appreciate it departs from that in the midpoint.
Adam Baker: And just secondly, looking to the uplift in free cash flow expected in the second half and with heavy being pushed out furthermore. Just wondering if you've given any thoughts to pre-delivering into your hedge book similar to what some of your peers have done, maybe some of those longer-dated hedges in FY '28 to get unencumbered free cash flow earlier on in the piece.
Ryan Gurner: Yes. Look, Adam, it's been a consideration. I think what I'd say is we want to be flexible to that. It's probably unlikely. Any additional cash flow, we'll consider it. We've been thinking about it, but it's probably unlikely at this stage.
Operator: The next question is from Alex Barkley with RBC.
Alexander Barkley: Quick one on the upcoming resource update. Is there likely to be any impact from the KCGM expansion lifting the mill and lowering your cost base? Does that bring new ounces to life? Or is that maybe going to be seen in later iterations of your resource updates?
Stuart Tonkin: I think it will be in later iterations. We'll absolutely -- we kind of look at understanding that cutoff grade of material that's coming out currently as waste or mineralized waste out of the pit. You appreciate that the stockpile is 0.6, there's nearly 3 million ounces sitting in low-grade stockpiles of 0.6 grams per tonne, taking rehandle costs and the value of gold today, 0.5 coming up in the back of a truck out of the pit could be financially better than that stockpile rehandled and milled. So that's fascinating when you look at the overall mill cost. It's going to be -- the milling cost is essentially 0.1 of a gram. So if that's already been moved, it's waste, it's in the back of a truck, it's moving to the surface. It could go direct tip into the crusher into the mill and be very economic. So yes, 0.35 starts to really produce a significant margin out of the pit, which today may be called waste, but in the future, it could be ore. We're not changing that into the resource at the moment. But I think over the future years, it will be pretty important to look at what the overall ounces are. Appreciating all-in sustaining costs lift, so you start bringing that low-grade material in. So we've got to be quite sensitive to that.
Operator: The next question is from Hugo Nicolaci with Goldman Sachs.
Hugo Nicolaci: First one for me, just are you able to provide any update in terms of the grade reconciliation work at some of the Yandal mines? And maybe any commentary there on how we should think about the medium-term mine plan relative to the existing reserve grades?
Stuart Tonkin: Yes. So the areas for Yandal, I think one of the concerns was the Orelia open pit reconciling. We're getting a lot of that material coming down into the feed of reconciling well. It's about 1.4 grams. There's about 215,000 ounces remaining. So it's only less than 2 years of feed contribution. So that will be something that we'll keep a close eye on. But at the moment, yes, pretty pleased with what's coming out of Wonder underground, what's coming out of the TBO underground and obviously, Orelia's contribution to it. So yes, 1.3 to 1.6 has been the Bannockburn that's also going to be a feed in the future. We're doing all the waste stripping in that at the moment. That will start to be a better grade than the current sources for the Thunderbox. In the north at Jundee, there's new mines being developed and opened at Griffin Cook (sic) [ Cook-Griffin]. So once they start to come into the feed, we'll get greater feel on the reconciliations. And then the paste plant that's being commissioned allows us to get back into some of those secondary tertiary stopes that are the pillars from the higher grade at the upper levels. That will help us as well start to lift overall average grades at Jundee.
Hugo Nicolaci: And then just maybe one for Ryan. You noted earlier in your piece that the balance sheet strength allows you to fund opportunities that may arise. Should we interpret that as organic and operational improvement opportunities? Or are you perhaps signaling that Northern Star is open to further acquisitions?
Ryan Gurner: No, I think the former, Hugo. We've got plenty on our plate. We're focused on delivering the mill expansion, heavy will be upon us. So plenty on our plate, looking to get the best return for our capital deployed.
Hugo Nicolaci: Fantastic. So that might be the case, but just worth clarifying. And then last one for me. Has there been any progress in considering either some of the portfolio rationalization you've previously talked to or maybe the ability to bring some of that regional material into the expanded KCGM?
Stuart Tonkin: You're talking divestments, sorry, Hugo?
Hugo Nicolaci: Yes, both sort of divestments or maybe bringing some of the higher-grade mines that you have in the region into the KCGM and displacing some of that low-grade stockpile feed?
Stuart Tonkin: Yes. Look, we certainly see that in the medium- to long-term benefit, things like Hercules, Red Hill, et cetera. We'd be pleased to see how that could overall improve the ounce profile for KCGM. I think we want to -- before we run here, really get it commissioned, get it bedded in and delivering growth. I think it was as per Slide 9, those step-ups in production from that new plant from the KCGM sources before we cloud it with some of the regional stuff. There's still quite a bit of an approval time frame on some of those additional feeds regionally. Rationalization, I think over the years, we certainly are migrating towards these longer life, lower cost, higher-margin production centers, simplifying the business. We've always done it. You'll see subsequent to the half year, we sold our interest in the Central Tanami joint venture for $50 million. You see us regularly doing this over time anyway. So that's probably a natural course of our business.
Operator: There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks.
Stuart Tonkin: Great. Thank you so much for joining us on the call today, and I appreciate your interest in our company on what is a busy day. Have a good day. Thank you.
Operator: This does conclude our conference for today. Thank you for participating. You may now disconnect.