Northern Star looking to grow North America footprint
Northern Star Resources expects to make its presence felt in North America once it finishes absorbing Saracen Mineral Holdings through a $5.97 billion offer set to make it the world’s sixth-biggest gold miner (reports The Australian Financial Review).
16th October 2020
Northern Star Resources expects to make its presence felt in North America once it finishes absorbing Saracen Mineral Holdings through a $5.97 billion offer set to make it the world’s sixth-biggest gold miner (reports The Australian Financial Review).
Saracen boss Raleigh Finlayson, who is poised to become managing director of the combined entity, said Northern Star’s Pogo operations were the beachhead for expansion in North America.
Mr Finlayson also predicted the coming together of the two West Australia-based gold miners would lead to huge efficiencies in milling across operations centred around Kalgoorlie and across the Yandal belt.He said the milling efficiencies had barely been taken into account in the $1.5 billion to $2 billion of value creation promised over 10 years through what both companies have described as a friendly ''merger'' proposal.
Northern Star executive director Bill Beament told the opening day of the Diggers and Dealers mining conference in Kalgoorlie that it was the most logical M&A deal in mining for decades.Mr Beament said that too often "soft issues" got in the way of the best deals in mining, but the Northern Star proposal had sailed through with both boards."Both boards nailed this in about a single hour meeting," he said.
The combined entity will have a huge landholding in the Yandal belt, where it is targeting production of 600,000 ounces a year through the Jundee, Thunderbox and Bronzewing operations.Mr Finlayson said there were significant opportunities for grade improvement and production upgrades in the Yandal belt where Northern Star's $242.6 million acquisition of Echo Resources last year was quickly overshadowed by its move in December to pay Newmont $US800 million for its 50 per cent stake in Kalgoorlie's historic Superpit mine.
Saracen had secured Barrick's 50 per cent stake in the Superpit for $US750 million a month earlier.The combined entity is targeting 1.1 million ounces a year of production from the Superpit and operations around Kalgoorlie, where both Mr Finlayson and Mr Beament attended the School of Mines.The joint Superpit owners have just gained a green light for a planned $600 million expansion of the mine on Kalgoorlie's doorstep.
Northern Star purchased the Pogo operations in Alaska for $US260 million in 2018 and is looking to boost production to 300,000 ounces a year.Mr Beament said both Pogo and Jundee were relatively young in gold mining terms and had a lot of growth left in them.In August, Saracen and Northern Star extended the Superpit mine life by more than two years and lifted its gold reserves from the 6.3 million ounce estimate of the former owners to 9.7 million ounces.
The co-owners said they would expand operations at the Superpit and increase production from 500,000 ounces a year to almost 675,000 ounces a year over the next eight years.
Mr Beament didn't rule out further acquisitions by Northern Star but said the combined entity's initial focus would be on organic growth and getting the most out of existing operations. Image: Northern Star Resources
NST Price at posting:
$15.81 Sentiment: Buy Disclosure: Held
(20min delay)