Northern Star Resources Ltd (ASX: NST) shares are falling heavily on Friday morning.
At the time of writing, the gold mining giant's shares are down 16% to $22.46.
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Why are Northern Star shares falling?
Investors have been selling the gold miner's shares this morning following the release of an operational update.
That update revealed that management believes achieving the lower end of its downgraded FY 2026 production guidance will be challenging.
According to the release, Northern Star has experienced weaker performance over the last two months. This has been driven largely by weaker-than-planned milling performance at the KCGM operation and reduced mining productivity across several operating areas, particularly at Jundee.
The company revealed that total gold sales for January and February were 220,000 ounces.
While several factors will continue to influence the final result, Northern Star currently expects FY 2026 production to come in above 1.5 million ounces. However, the outcome will depend heavily on mill throughput at KCGM, which management says continues to be highly variable.
This compares to its most recent guidance of 1.6 million to 1.7 million ounces, which was downgraded from 1.7 million to 1.85 million ounces.
KCGM expansion
Northern Star also provided an update on the KCGM Mill Expansion Project, which it says remains on track for commissioning in early FY 2027.
Management revealed that the company has increased labour on the project to offset lower-than-planned productivity and protect the commissioning timeline. Approximately 800 contractors are currently working on the plant and another 400 contractors are completing enabling works.
But until the expanded mill comes online, operations will remain dependent on the existing mill, where performance has been highly variable.
Northern Star's managing director and CEO, Stuart Tonkin, said:
Front of mind for Management and the Board is that efforts to achieve the FY26 forecast do not compromise the transition to the new plant and have negative implications for Q1 next year. To deal with that concern, Management's focus over the next four months will be to set the Company up to achieve its full potential from the start of FY27 and not on the achievement of short-term guidance above all else. The production focus over this period will be on extracting ounces in the most effective way, from both a cost and mining efficiency perspective.
Looking ahead, Northern Star advised that it has commenced work on producing medium term forecasts. It expects to release these forecasts prior to the end of the year. Tonkin adds:
We have heard the clear feedback from our investors on the importance of a more granular understanding of the medium-term production, cost and capital outlook for our asset base. This work is underway and we are committed to presenting this information to the market later this year.
