Activist investor Elliott Investment Management late on Wednesday called on Australia's largest gold miner Northern Star Resources to immediately restore shareholder value by changing its board and undertaking a formal strategic review, citing severe underperformance.

Elliott burst publicly onto Northern Star's register last week with a more than A$1-billion ($700.80-million) stake, calling for a review and new leadership, citing repeated "operational missteps", including seven outlook misses in four years, and a share price that vastly underperformed its peers.

The call from Elliott, which successfully pushed BHP to collapse its dual listing after a five-year campaign, came as the $19-billion miner was in the process of recruiting a new CEO and in succession planning for its chair.

Northern Star responded to Elliott's approach with a letter to shareholders earlier on Wednesday, saying it was happy to work with the activist investor and consider a board candidate that Elliott might suggest.

The US-based investor said: "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."

The case for a strategic review of Australia's largest listed gold miner is now clearer than it was before the board published its letter, Elliott added.

ACTING FASTER

In its shareholder letter, Northern Star said that it did not consider it the right time for a sale process. The miner acknowledged that it had been approached by several companies on considering various corporate combinations, given the underperformance of its shares.

"Their response is definitely less than adequate and detailed plans for creating value are still amiss," said Elan Miller, a deputy portfolio manager at Blackwattle Investment Partners.|

"I would be of the view that management are not fully across the asset or the production issues and therefore there really needs to be a reset in people way deeper than just the CEO," he added.

Northern Star appears to want to go forward with its richest assets, Kalgoorlie's Super Pit, the Hemi and Pogo projects, said analyst Daniel Morgan of Barrenjoey. Remaining assets could be sold to cashed-up mid-tier gold miners, he added.

"I think a lot of what Elliott is looking for Northern Star to do, (it) will do, but Elliott's pressure is going to make Northern Star act faster," he said.

In its letter, Northern Star said that investment banks in the last six months had proposed a spin-off of assets, in an option also reviewed by its financial adviser, but one the miner decided not to act on.

Over the past year, Northern Star has faced several headwinds at its Kalgoorlie gold operations in Western Australia, and it said achieving the lower end of its fiscal 2026 production guidance would be challenging.

Shares of the company fell as much as 5.3% to A$17.55 in early trade on Thursday, their lowest level since March 24. The broader benchmark S&P/ASX 200 index was down 0.8% by 00:38 GMT. The stock has lost nearly 33% in value so far this year, outpacing gold's 5% decline.