Northern Star Resources' (ASX:NST) board has formally acknowledged the company's underperformance, but a recent letter to shareholders suggests it "does not understand the magnitude of change required" to regain their trust, activist investor Elliott Investment Management said Thursday.

Elliott, which earlier disclosed a stake of more than AU$1 billion in Northern Star, is pushing the company to launch a strategic review that includes a potential sale, and strengthen its board.

In response to Elliott's initial outreach, Northern Star Chairman Michael Chaney said the company has been approached by various parties over a possible corporate combination, but it is not the right time to pursue a sale process.

"The board cannot simultaneously acknowledge inbound corporate interest, confirm its advisers have modeled structural options, and then decline to run any kind of formal process," Elliott said. "The case for a strategic review is now more apparent than it was before the board published its letter."

The activist investor believes Northern Star must move immediately to restore shareholder value by bolstering its board and launching a formal strategic review of alternatives.

"No options should be taken off the table, and no outcome should be prejudged," it said.

Northern Star Resources did not immediately reply to a request for comment from MT Newswires.

The company's shares declined 2% in recent Thursday trade.