I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.
Good morning, and thanks for joining us on the call today. As this is my last market call, I'll speak briefly on my tenure at Northern Star Resources and then hand over to Ryan Gurner to present the highlights for the financial year and the outlook for FY27. There's been a lot to focus on in the recent trading period. But for those that have been here with me on the journey for the past 13 years, we've been on an incredible journey and had some real fun along the way. During that time, we've seen annual gold production increase 20-fold. We've enjoyed a 30 times uplift in share price from AUD 0.70. Over the 13 years, gold resources have grown 40 times to 89 million ounces.
Market capitalization is up 100 times from AUD 300 million to over AUD 30 billion. As true demonstration of any healthy business, we give back. To date, we have returned AUD 3.3 billion to shareholders through dividends and share buybacks. During my tenure, I have seen the team grow from a humble single asset with 250 jobs to now a global portfolio employing over 10,000 people with decades of future ahead. This is something which I am extremely proud of. It's a rare experience to be associated with such success, and I really wish to give huge recognition to the numerous great people that I've had the privilege to work alongside through both the challenges and opportunities. This is the team that will continue to drive success in the future.
Their relentless efforts, 24/7, 365 days a year, is what matters and truly makes the difference. The Star core values are strong, and our team are the true contributors to value creation and have done the heavy lifting to build the great company that Northern Star is today. There is no doubt that we have built an exceptional platform that is absolutely set up for success in the very near term. Northern Star will continue to generate significant value for shareholders, and I am proud to have worked with such an outstanding team. I'd now like to hand over to our very capable Deputy CEO, Ryan Gurner, to talk to the highlights of FY26 and the outlook for FY27.
Thanks, Stu, and good morning, all. I would also like to welcome here today Steven McClare, our Chief Technical Officer, who is joining us today and who will talk to a few of the slides. Welcome, Steve. I am pleased to now present to you the financial results for the year ended 30 June 2026 and our outlook next year, or this year, I should say. I will be referring to the slides in the results presentation pack from here. If we go to page four, FY 2026 was a year of significant investment and transition for Northern Star as we completed stage 1 of the mill expansion at KCGM. While the business faced operational challenges during the year, the underlying strength of the portfolio remained evident in the financial results.
The group generated AUD 4.3 billion of underlying EBITDA, up 22% on the prior year, which translated into AUD 2.9 billion of cash earnings. Importantly, despite FY 2026 representing the peak investment phase of KCGM mill expansion, the business still generated AUD 190 million of underlying free cash flow. Today, the board has declared a fully franked dividend of AUD 0.30 per share, bringing total FY 2026 dividends to AUD 0.55 per share. During the year, the company completed AUD 129 million of its AUD 500 million on market share buyback program. We enter FY 2027 with the KCGM expansion commissioning underway, marking the transition from a period of significant investment to one focused on operational execution and value realization.
Supported by an investment-grade balance sheet and financial flexibility, the business is well-positioned to begin capturing the benefits of this transformational investment. Turning to slide five, our balance sheet remains a key strength. We ended the year with AUD 1.2 billion in cash and bullion, with gearing leverage and liquidity metrics all comfortably within our financial targets. Our financial position is further supported by access to flexible long-term funding, and we continue to maintain three investment-grade credit ratings. This reflects both the quality of our asset portfolio and longevity of our production profile, all located within Tier 1 jurisdictions. We enter FY 2027 with a well-funded business, strong balance sheet, and the flexibility to progress our organic growth pipeline while maintaining capital allocation discipline. If we go to slide six now, our approach to capital management remains unchanged.
As mentioned earlier, the board has declared a fully franked final dividend of AUD 0.30 per share, bringing the total FY 2026 dividends to AUD 0.55 per share. This represents a 27% payout of c ash earnings and approximately AUD 785 million returned to shareholders through fully franked dividends during the year. In addition, we completed AUD 129 million of our AUD 500 million on market share buyback program. Now to slide seven, which highlights all three production centers generating strong margins and making meaningful contributions to group earnings. At a group level, FY 2026 underlying EBITDA margin was 56%, with underlying EBITDA of over AUD 2,700 per ounce, reflecting the strength of the gold price environment. Kalgoorlie delivered a particularly strong result, achieving 64% EBITDA margin, while Pogo continued its improvement trajectory, achieving a 60% EBITDA margin.
Yandal delivered a 47% EBITDA margin and contributed approximately AUD 1 billion of EBITDA during the year. While margins were lower than Kalgoorlie and Pogo, we remain focused on further improvement here. Importantly, Yandal remains a significant contribution to the group, generating over AUD 300 million in net mine cash flow during the year. I would like to point out a reconciliation of statutory NPAT to underlying EBITDA and cash earnings has been provided in the appendix of this presentation on slide 18, and slide 17 outlines the abnormal items to reconcile from statutory profit to underlying NPAT. If we move over to slide 8 now, which highlights our continued improvement in returns and earnings per share.
FY26 delivered an 18% increase in return on capital employed, with ROCE increasing to 13.4%, while underlying earnings per share increased 5% to AUD 1.24 per share. Underlying EBITDA also increased 25% year-on-year to AUD 2.7 billion. Importantly, these improvements were achieved during a year of significant operational transition and investment, including the stage 1 commissioning of the KCGM mill expansion. As KCGM transitions from commissioning into steady state operations, the asset will become an increasingly important driver of earnings, free cash flow, and shareholder returns. Over the slide to page 9, we have released our FY26 reporting suite today, which provides a comprehensive overview of our safety, environmental, social, and governance performance. These documents outline our approach to responsible business practices and the progress made during FY26.
I encourage you to read them alongside the annual report. Now, slide 10. The company is forecast to deliver group production of 1.5 million to 1.65 million ounces in FY27. Production is expected to be weighted to the second half of FY27, reflecting planned major shutdowns in the September quarter and the commissioning at KCGM. We will discuss KCGM in more detail over the coming slides. Jundee's operational review is complete, with the outcomes incorporated into an up-to-date medium-term mine plan that rationalizes the operating footprint and optimizes the mining sequence. FY27, All-In Sustaining Cost is forecast at AUD 3,050 to AUD 3,450 per ounce Australian, with cost per ounce expected to improve through the year. This guidance reflects approximately 5% inflation across the portfolio.
Higher royalties associated with the gold price, together with higher oil price assumptions, draw down of stockpiles at Carosue Dam, Jundee, and KCGM, and approximately AUD 850 million to AUD 915 million of sustaining capital, primarily comprising underground development and associated ventilation, power, and pumping infrastructure. I would like to highlight Bannockburn at our Thunderbox operation is now in commercial production, and that means the stripping costs and the associated equipment costs are now within sustaining capital at that production center, which is about AUD 85 million to AUD 95 million for FY27. FY27 total group capital investment, which includes sustaining capital, growth capital, and the Hemi Project, is forecast at AUD 2.6 billion to AUD 2.9 billion. While contingency has been incorporated into the capital plan, a portion of capital expenditure remains discretionary.
Provide flexibility to optimize expenditure in line with operating performance and capital allocation priorities. FY27 growth capital of AUD 1.5 billion to AUD 1.77 billion comprises operational growth capital of the Kalgoorlie, Yandal, and Pogo production centers and KCGM mill expansion and readiness. AUD 200 million to AUD 250 million is planned for the Hemi Project, primarily for ongoing engineering design, NPI works, and commitments for long lead items. Exploration expenditure in FY27 is forecast at AUD 230 million to AUD 250 million, with investment focused on KCGM, Pogo, and Hemi to support reso urce growth and mine life extensions. Steve will talk to this shortly. FY 2027 depreciation amortization is forecast at AUD 1,000-AUD 1,200 per ounce.
The effective tax rate is forecast at 30%-32%, with FY 2027 cash tax payments forecast at AUD 450 million-AUD 550 million, based on current assumptions, which incorporates approximately AUD 300 million-AUD 350 million of cash tax benefits associated with the acquisition of the Hemi Project. Turning to slide 11 now. We are guiding KCGM production of 550,000-650,000 ounces for FY 2027. The guidance range reflects a balanced assessment of ramp-up expectations and associated risks during the early stages of commissioning. It has been informed with the early data from commissioning and Northern Star's established operational planning, technical review, and risk assessment process, supported by external benchmarking and an independent technical assessment. The range also considers downside scenarios relating to ramp-up performance, stockpile grade variability, and recovery performance following completion of stage 2.
KCGM is forecast to deliver 3.5 million-4 million tons per annum of underground ore, with open pit mining at Golden Pike North continuing. At KCGM, operational growth capital of AUD 895 million-AUD 945 million is forecast, primarily relating to the Fimiston South cutback and associated mining fleet expenditure, supporting targeted material movement of 60 million-65 million tonnes this year. Underground development and infrastructure at Fimiston Underground and Mount Charlotte, together with the equipment fleet cost supporting mining activities across the underground operations. Mid-life refurbishments of the open pit fleet associated with the Fimiston South cutback, processing capital works, and capital drilling to support future resource and reserve growth. We have combined the mill expansion project and readiness projects with the FY 2027 forecast expenditure of AUD 350 million-AUD 470 million.
This comprises KCGM mill expansion project of AUD 150 million-AUD 210 million to complete stage 2 and consolidate Gidgee processing into a single hub. The capital outlook includes additional contingency as a prudent measure, reflecting the remaining construction, commissioning, and transition activities ahead. KCGM tailing facilities, we are guiding AUD 100 million-AUD 120 million to complete the final stage of the project, and the KCGM power infrastructure, AUD 100 million-AUD 140 million for the new thermal power station and renewable ready transmission infrastructure. I would now like to hand to Steve McClare to talk through our growth projects. Thanks very much, Steve.
Thank you, Ryan. Turning to slide 12, where I will discuss the FY 2027 outlook for KCGM, our largest asset. The 27 million tonne per annum processing expansion has now moved into the commissioning phase and remains on schedule. All commissioning is underway, then project handover to operation occurs, and the ramp up to follow a measured approach through the first half of FY 2027. The existing processing plant is expected to operate through August before tying to the expanded processing facility in September. Stage 2 remains on track for completion in late one-half FY 2027 and is expected to deliver additional benefits through improved recoveries and the elimination of concentrate haulage between KCGM and Gidgee. Importantly, FY 2026 represented the peak capital investment phase of the expansion project.
As we move through commissioning and establish operating parameters during FY 2027, our focus shifts from construction and execution to operational performance, cash flow generation, and returns. Turning to slide 13 and the Hemi project. Hemi is a high-quality gold project in a Tier 1 jurisdiction with 13.2 million ounces of mineral resources and 5.5 million ounces of ore reserves. State and federal permitting is progressing, with secondary approvals required before early works can commence. The managed aquifer recharge trial is underway and progressing to plan. The current focus is on progressing engineering and design for the processing plant and non-process infrastructure, together with mine sequencing and updating of feasibility assumptions. FID is targeted for late FY27, subject to the required external and internal approvals with an estimated build period of approximately two and a half years post FID.
FY27 expenditure is therefore focused on progressing the project towards FID while maintaining flexibility around the timing and level of investment. Turning to slide 14. Exploration remains an important source of long-term value creation for Northern Star. In FY26, we continued to grow and upgrade our mineral resource and ore reserve base. We ended 31 March 2026 with 88.9 million ounces of mineral resources and 28.4 million ounces of ore reserves, supporting a reserve-backed production profile of more than 10 years. Resource growth was delivered across the portfolio with meaningful contributions from Kalgoorlie, Pogo, and Hemi. Importantly, we continue to add resources at attractive rates with a cost of resource additions averaging AUD 8, AUD 23 per ounce during the year.
Exploration remains a high-value investment in the portfolio, extending mine lives, increasing reserve flexibility, and creating the future growth opportunities. Each additional reserve ounce strengthens the long-term production profile and increases the value of the existing infrastructure and operating platform. I will now hand over to Ryan to complete the final slide of the formal presentation.
Thanks, Steve. So turning to slide 15, this summarizes the investment case and the key themes shaping the next three years for the company. FY26 represented a significant year of investment and transition for Northern Star, and as we move into FY27 and beyond, our focus increasingly shifts now towards capturing the benefits of those investments and striving to improve the performance of the portfolio. T aken together, these elements provide a strong platform for Northern Star over the medium term. The investments made in recent years, particularly at KCGM, have established the foundations for improved operating performance with the focus now on delivery, ramp up, and realizing the returns from that investment.
A nd look, before we go to Q&A, I think I would just like to say a few words about Stu here, given that this is his final call with Northern Star. Stu, look, I would really just like to recognize the remarkable contribution you have made to this company. And on behalf of all of our employees, thank you for the leadership, the vision, and commitment you have brought to Northern Star over more than a decade. Under your leadership, Northern Star has grown from a single-asset Australian gold producer into a globally recognized gold company, delivering significant value for shareholders. For me personally, it has been a privilege to work alongside you. Thank you for your trust, support, and friendship.
I have learned a great deal from you over the years, and I am grateful for the opportunity to work with you. From all of us at Northern Star, we wish you and the family all the very best for the future. And on that note, I would like to hand back to Mel for the Q&A. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Levi Spry with UBS. Please go ahead.
Morning, everyone, and thanks for your time today, and thanks for all of your time over the years, Stu. Maybe just another question for Steve on the ramp-up at KCGM. Thanks for the extra color, but what are the expectations around when you will be in a position to update us on the, I guess, the ramp-up further? What do you need to see? Can you remind us how the power requirements or the power plant you are building might fit into that?
Thank you for the question, Levi. I just updated where we are at at the moment. We are basically within the project running the startup in terms of the ore commissioning. When we transition in September to handing that to operations, the project team will actually remain in support, but the operations will be in the driver's seat. At the moment, the operations group is there supporting the project and those roles just reverse. Everything is tracking to plan in stage 1, and we anticipate the tie-over of the Fimiston SAG mill into that circuit to occur in September. With regard to the power, we actually have a good connection, and we also have exclusive rights to the joint venture Parkeston facility, which is a 110-megawatt power station, and that combined provides the power to KCGM.
Longer term, the building of a thermal power project actually improves the efficiency and modern, I guess, rapid power support to KCGM, and that will just transition. Once that is free, or built, Parkeston becomes free and can take on other roles.
Okay, thanks. It's not a constraint on the ramp up?
Not at all.
Okay. Thank you. Just sticking with guidance. When it comes to Jundee, Thunderbox, Carosue Dam, what's imputed in today's FY 2027 guidance, is that what they look like go forward? All three assets, I guess. Obviously, the gross capital's rolled off a fair bit at Yandal, even if you back out something for Bannockburn. Is that the go-forward plan for all three assets?
Thanks, Levi. Look, obviously, we haven't, and we won't, and we're not giving out medium-term guidance at this stage. Obviously, we've got a new CEO coming. He will have a view. I guess we'll go through that as a business, and we plan to come back to the market with medium-term guidance later. I can't give you beyond FY 2027 for now.
Okay. Thank you. Thanks for your time.
Thanks, Levi.
Thank you. Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Morning, guys. Stu, congrats on the tenure. Look, picking up firstly maybe from Levi's question, you've noted in the release the Jundee operational review is complete, and you've incorporated those outcomes into an updated medium-term mine plan. Can you talk us through some of the conclusions that came out of that review and what's actually been incorporated into that future plan? Is FY 2027 commentary around production and costs broadly what we should assume going forward out of that?
Thanks, Hugo. Yeah, look, I would start with just saying, I think we would all agree, Jundee has been an incredible asset for Northern Star for more than a decade. But you have seen over the near term that we have been facing grade decline and increasing development to achieve the same profile against a backdrop, in the sector at least, of rising costs. Yeah, we got around that. We have reduced ultimately the operating model of the footprint to maintain, I guess, a steadier and consistent production profile, focus on the core ore zones at Jundee. And we have, I guess, right-sized or reduced equipment and people from the plan to slow down activity and focus on quality.
What you will probably see this year, FY27, is in the back half, we have got to do a little bit of investment, but we are going to see a bit higher grade in that back half. H1 is a set-up half, set up the development to provide those higher ore sources in half two.
Got it. That is helpful. Then if I turn to Hemi, I believe your federal approval conditions are due to be received today. Is there anything in that process so far that would lead you to think you will not have all your primary and secondary approvals by the end of 2026? And does the AUD 200 million-AUD 250 million CapEx guidance for this year that you have given assume that those early works at site can commence in the second half on the back of that?
Hugo, in answering that question, I guess we do not control the approvals. The approvals will come when the approvals are done by the government. That is tracking to plan as we work at the moment. We are happy with those numbers, and approvals are not currently a constraint. It is actually aligned with the FID. The early works that we talk to are minor matters. It is things like camps and stuff like that we can do whenever we receive approvals at that point in time. So no constraints and tracking to that end of financial year FID.
Okay, great. I'll pass it on. Thanks.
Thank you. Your next question comes from Kate McCutcheon with Bank of America. Please go ahead.
Hi. Good morning, Ryan and Steve. Best wishes for the next chapter, and thanks for your time over the years. Just the KCGM guide for the FY. We've got production expectations and underground. Could you just give some color on the range you're shooting for the mill throughput and head grade, particularly how to think about how long you're expected to see the low-grade stockpiles? Ryan, are any of the costs capitalized there, or are we all going to OpEx [audio distortion] ?
Yeah. Thanks, Kate. Look, I won't give throughput of what we're expecting because there's a range, obviously. I think, in my commentary, I spoke about how we've considered that with industry benchmarks, with an external assessment, with our own views. We've thought about delays in ramp. We've thought about lower in grade in relation to the stockpile. So when we've come up with, I guess, the range, all those factors were involved. Of course, we've got very early data from our commissioning, which Steve spoke about. So that's what's formed the view there. You see that I've called out our underground outlook in terms of tonnages, that 3.5 million-4 million tons, and then, of course, there's going to be primary ore from the pit feeding it. So hopefully that's enough, Kate, to formulate those views.
In terms of your question on capital OpEx. Yeah. So probably as Steve was mentioning, we've obviously started that C3 commissioning, which is all commissioning now and looking to tie in in September. So over that period, some of the costs associated with running the plant will be capitalized. Those costs included things like power, water, some reagents, not all reagents, but some reagents. Then probably the major cost is operational people as we commission. I am not expecting that to be a large amount. It might be in the order of 10, maybe AUD 15 million maximum. But that is covered in our guidance, in our contingencies for FY27.
Okay. Thanks, Ryan. Can I just come back to Jundee? Sorry, I am just a bit confused here. So we've got the new mine plan, but we've got flat production year on year. Does that mean that we have like a higher margin? It does not seem like we have a higher margin, lower production mine plan going forward, or does that kick in later? I am just trying to understand what the new mine plan and the review mean.
Yeah. So, there is a reduction in primary ore this year, supplemented by low-grade stockpiles. That is the plan this year. As I said, there is going to be development, in this first half to get access to higher grade, in the second half, Kate. So the focus is going to be on lower tonnage, but higher quality ore sources.
Okay. Thank you, Ryan.
Thank you. Your next question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Hi, Stu and team. I guess potentially an awkward question, Stu, given you're leaving and Suresh coming in in October. Can the team maybe talk about what approach has been taken to put this guidance together? I use the same process as prior years with the same error bars and contingency within. Secondly, who is accountable for this guidance? Is this where everyone on the ExCo is going to be judged by? Thank you.
Thanks, Dan. I'll hand to Ryan. No awkward questions, mate. It's all good.
Thanks, Dan, for your awkward question. Look, really simply, our outlook's been developed through our established budget, operational planning and technical review process. It's been informed by demonstrated performance. In relation to KCGM, as I mentioned in my talk there, it's then been informed by industry benchmarks, so ramp-up curves, an independent assessment of the plant. Then we've right-sized it or we've stress-tested it on other factors around slow ramp-up, grade profile. We've looked at delay to our recovery expectation on stage 2. We've done all those things. Ultimately as a management team, yeah, we are accountable for it.
Okay. Thank you, Ryan and Stu. On the Carosue Dam, you are guiding to 150,000-160,000 ounces for FY 2027. Then you say Kiena and Twin Peaks come in from 2028. Does that mean we expect production in FY 2028 to just lift a tad from 2027 levels because you have those new ore sources coming in? Is that how I should read that?
I think, look, as with all projects down there, they do not start rearing. It will be a slow build up. I think what I would say is that those two projects are there to supplement the ore source feed at Carosue Dam. Kiena is a 2 million ton, 3 gram plus underground in close proximity to the mill. It is going to be a really good little project for us, 200,000 ounces. Yeah, it is going to be a good additive ore source for Carosue Dam.
Ryan, just sticking on some of these financial things. Just on the AISC guidance. Is there a significant non-cash charge that comes through for the various stockpiles, particularly KCGM through FY 2027? Just wondering, obviously, we have got the AISC guidance you have given, but it could be a large margin stockpile charge that is within that is non-cash. Just keen to unpick that.
Yeah. Dan, it is a good point and maybe I think it is something that I am sure each quarter we will talk to and go, "How does this work?" Really, I would probably say for KCGM, no. I mean, Jundee and CDO, yes, because they will be drawing down feed and that will have a non-cash cost. From a margin perspective, or sorry, cash flow perspective, it will not matter. In respect of KCGM, probably what I am actually expecting is a neutral to maybe even a small buildup of inventory. The reason being is, and it is going to depend on how ore sources reach the mill and direct tip and how much that goes in. What I think you will find is that we have got a 1 million ton of high-grade material there.
We will draw that down. That will have a charge. Costs generally, right, across the business, the sector increasing. That means our inventory costs are increasing, whether we like it or not, with oil, people's cost, capital, all those things. That will probably sort of negate that. But then probably just to remind everyone, the stockpiles actually carry no cash costs. They come through free. They will have a P&L charge in non-cash because we have acquired them. But actually, those stockpiles come through of a zero cash cost. The reason why we are building up inventory in this current year just gone is because obviously we were mill constrained, so we have had that 1 million ton on the stockpile, but equally, we are also stockpiling lower grade material.
So we are building up that balance sheet, whereas now we are going to be obviously drawing it down. But those initial stockpiles, they have no cash value.
Yeah. Okay. Thanks, Ryan, for the clarification and thanks, Stu and team, for your perspectives.
Thank you. Your next question comes from Matthew Frydman with MST Financial. Please go ahead.
Sure. Thanks. Morning, Ryan , Steve, and Stu. Can I firstly ask about the step-up year-on-year in terms of sustaining capital spend? You have given some of the detail there on the breakdown across some of the projects. If I look through that, some of those look like one-off sort of capital or maintenance projects there. But I guess at a high level, to what extent is that run rate of spend in FY 2027 kind of now embedded in terms of sustaining capital? If you think about it in sort of a AUD per ounce basis, that is around AUD 550 an ounce. So is that the right number going forward? Thanks.
Yeah, good question, Matt. Appreciate it. Well, first what I'd say is there's contingency in that profile. Yes, there is some, again, this lumpiness. I remember last year, if I recall, we were talking about mid-life rebuilds at KCGM. Well, those were around the 20,000 hours. Now we're up to the 30,000 hours on some of these equipment. So those tend to come in and out. There's absolutely, I'll say, lumpy capital around processing and the things we need to do there. Then, of course, I think the real outlier is this deferred stripping at Bannockburn. The reality is we've got to bring that into our cost because we're 10% into the ore body, and that's what the rules sort of guide us around to sort of bring them into AISC.
I'd probably just say from a Yandal perspective, their actual total cost, if you just look at total cost last year to if you look at what we guided, they're actually the same. It's just this bring forward in relation to stripping. But there are some more processing costs in both the Yandal region and then there's some lumpiness at KCGM. And equally, I'd say, Matt, there's some discretion in some of this capital. I think last year we guided AUD 750 million. We ended up printing about AUD 650 million. So we are able to prioritize the capital that is required in the business and hold off that isn't subject to macro performance and business performance.
Yeah. Got it. Thanks, Ryan. That's helpful. Then, I guess in a similar vein, that slide 11, the breakdown at KCGM there. Obviously, you highlight some ongoing activity in terms of growth capital at some of those projects. Is it fair to, again, sort of extrapolate that level of activ ity on those projects beyond FY27? Is that what you're trying to indicate there? And then conversely, obviously, you've got the mill expansion and readiness projects, and the mill expansion CapEx itself. Presumably, that rolls off pretty materially into FY28. Is that fair?
Yeah, Matt. So, I guess, it was great to see you out at KCGM. You know how much waste we've got to shift on that southern leg of the pit. So, we're guiding 60 million-65 million tonnes of movement there. So that's going to continue. And our aspiration to get to 8 million tonnes of the underground will continue, too. So that's the majority of that investment. So yes, I think is fair. In relation to the readiness, absolutely. Tiles will finish this year, project will finish this year. I think there's a very small amount, potentially into the 2028 year for the thermal. But there's almost not much beyond that.
That's really helpful. Thanks, Ryan. Then maybe just lastly, if I look at KCGM production guidance and the outlook for the ramp-up. Obviously, you've fielded a couple of questions on this already, and you've talked through how you've really kind of stress-tested the numbers there. How you've kind of thought about the error bars in terms of that ramp-up, looking at ramp-up curves and so on. If I take a step back, you've got a new mill that's going to be plugged in in a month's time, which is going to more than double your capacity. Your guidance is that you're going to produce a little bit more this year than last year.
So I guess I'm wondering where Steve and his team see the real opportunities to maybe do better than what you're guiding to in terms of the ramp-up. What are the opportunities to beat the expectations there, and yeah, what sort of works programs are you trying to implement in the next three months to try and do better than those numbers? Thanks.
Thanks, Matt. Look, I will hand to Steve, but I think what I'd say from my perspective is, you walk through it, Matt. It is phenomenal, but it hasn't been demonstrated yet. So I think we just got to be cautious around that before we see it. But I'll hand to Steve to maybe talk to some of it.
In releasing the guidance we've got here, Matthew, we basically have achieved the milestones we wanted to in ore commissioning to date, and that's allowed us, given us the confidence to release the FY 2027 numbers. From there, we want to continue to build a history, a data set, and then methodically apply that to the future. We don't wish to speak beyond FY 2027. What we've got here is a very prudent assessment, and we'll keep the market updated as we progress.
Okay. Got it. Thanks, Steve. Thanks, Ryan. Also thanks to Stu, and congrats on a successful 13 years at Northern Star. Cheers.
Thank you. Your next question comes from Adam Baker with Macquarie. Please go ahead.
Morning team, and all the best with your future endeavors, Stu. Just one on recovery at KCGM. Just looking at, I guess, the ramp-up period in that first FY 2027, where you are predominantly milling that low-grade feed. Prior to the integration of the Gidgee facility, can you give us, I guess, a benchmark where we are expecting recoveries to sit in this ramp-up period?
Yeah. Okay, Adam. To give you some flavor on that, the plant, as it is designed, gives an uplift of 1%-2% is what we have put over the longer-term average. That requires stage 2 to kick in in that phase. During the interim period, we will be feeding material to Gidgee and also producing a concentrate, and we do not get that uplift in material. If you look at our status quo and our history, it is business as usual, and we only get the uplift once we successfully commission stage 2.
Okay, so no change to that 80%, 82%, 83% recovery that you have been getting in previous quarters prior to the integration of the Gidgee facility. The one big change there is the low-grade feed going through the plant. So I am just wondering if there is an impact to recoveries, just putting lower-grade material predominantly through the plant.
Yeah, not the numbers you set because that depends on the grade that is fed and the source and the properties. Overall, the number I would say is probably a little bit lower than what you have said there, but it is what we would traditionally expect until we get the improvement from the capital.
Fantastic. Thanks, Steve. I am not sure who wants to take this one, but I guess just on Hemi and the aquifer recharge trials. Just looking at EPA recommendations, as one of the recommendations is putting the abstracted water back into the aquifer. Is this a common industry practice? I guess, do you see any risk with doing this into the future at Hemi? Thank you.
Yeah. No, it is a common practice where you basically, I would actually say it is a very good practice where you are dealing with water in an open pit operation. So we actually take the water. The trial is going very well. We are pumping about approximately 7 kilometers out and reinjecting that back into exactly the same aquifer. Then over time, for many years, it can return back to the mine. So it is nothing novel or unique in what we are doing, but we just need to test the parameters of the actual ore body and flow within the system.
Okay, thank you. I will hand it on.
Thanks, Adam.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Jonathan Sharp with JP Morgan. Please go ahead.
Yeah. Hi, Stu and team. Just another question on the KCGM ramp up. Just trying to understand the quarterly shape of the ramp up. Should we just think that is a smooth ramp up from Q1, Q2, Q3, Q4, or Q1? I know that you're running the old mill for a period of time in parallel, so just some clarity on that would be great.
It'll follow normal industry averages. It basically starts rough at the start, gets tuned, gets optimized. We learn how to run it, and over time, and we've said before, it's a two-year ramp up we anticipate before we get to the denominator of 27 million tons. So if you look at those industry norms, we're not expecting anything different from KCGM.
Okay. Yeah, I just note that you're running the old mill for a period of time in parallel. Does that change anything?
What we are doing today is what we have been doing for years, and in September, we change over to the new.
Okay. Second question, just given the external cause for a broader strategic review, has the board's thinking changed at all around the optimal portfolio of Northern Star or how it should look over the next three to five years?
No, Jonathan . We are always evaluating the strategic fit of our assets within the portfolio. You have seen we have been active there in the past, so nothing has changed.
Okay. Thank you. I will pass it on.
Thanks, Jonathan.
Thank you. There are no further questions at this time. I'll now hand back to Ryan for closing remarks.
Thanks for joining us on the call. I appreciate your interest in our company on what is a busy day. Thank you to Stu and thank you to all of you, and have a great day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.