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Elliott Slams Northern Star Over Refusal to Hold Strategic Review

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Elliott Slams Northern Star Over Refusal to Hold Strategic Review

Activist shareholder Elliott Investment Management has criticized Australian mining giant Northern Star Resources (ASX:NST) for failing to consider its proposal for a strategic review, according to a statement released on Thursday.

Earlier this month, the hedge fund called on Northern Star to conduct a comprehensive strategic review to maximize the value of the company's assets.

Elliott, which holds a stake worth more than AU$1 billion, released a presentation demonstrating that the gold miner had underperformed its peers over the past three years and missed market guidance seven times across the last four financial years.

The proposed review included exploring a potential sale of the business. Additionally, Elliott urged Northern Star's board to accelerate its search for a new chief executive officer and managing director following Stuart Tonkin's recent decision to step down from the role.

In a letter to shareholders on Wednesday, Northern Star Chairman Michael Chaney acknowledged that the company's performance had lagged expectations, but countered that it was not the right time for the board to "run a sale process for the company."

"We also regularly review the quality of our portfolio of assets and consider whether to hold, expand, restructure or sell individual assets," Chaney said.

"I can confirm that in the last 6 months we had investment banks propose a spin-off of assets and we separately had our financial adviser review those options. For now, we are comfortable holding the assets we do but this is a matter that will remain under regular review."

Elliott fired back, arguing that Northern Star's leadership fails to comprehend the scale of restructuring needed to revitalize its operations.

"The board's letter indicates that it does not understand the magnitude of change required to win back shareholders' trust, starting with significantly strengthening the board itself," Elliott said.

Meanwhile, research firm Jarden maintained its "underweight" rating on Northern Star, noting that the mining giant was sending "mixed signals" regarding its asset quality.

While Northern Star highlighted that its estimated mineral resources had risen 26% to 88.9 million ounces as of late March, Jarden cautioned in a June 4 note that a volume increase does not automatically guarantee high asset quality.

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