Northern Star buys Jundee gold mine from Newmont
THE DRILL SERGEANT: Northern Star Resources (ASX: NST) has entered into a binding purchase agreement to acquire 100 per cent of the Jundee gold mine in Western Australia from Newmont Yandal Operations, a wholly-owned subsidiary of Newmont Mining Corporation, for $82.5 million in cash.
The acquisition will increase Northern Star’s annual production from around 350,000 ounces to around 550,000 ounces, which the company pointed out will make it the second-largest ASX-listed gold producer.
The deal comes on the back of Northern Star’s recent purchase of the Plutonic, Kanowna Belle and Kundana gold mines for a total of $100 million.
The company said the completion of the Jundee acquisition will mean it will increase its production profile from approximately 100,000 ounces poer annum to approximately 550,000 ounces per annum in less than six months for a total investment of less than $200 million.
Northern Star said Jundee would immediately increase the company’s free cashflow and has potential to increase Reserves and Resources via exploration at and around the mine.
“Jundee is a tier-one asset in the Australian gold mining industry by any measure,” Northern Star Resources managing director Bill Beament said in the company’s announcement to the Australian Securities Exchange.
“It has a highly enviable record, whether it be exploration success, production or cashflow.
“I am highly confident that we will grow the inventory and extend the mine life at Jundee while reaping the benefits it will bring to our production and cashflow.”
Beament went on to say that with five operating mines generating 550,000 ounces per annum the company would meet the key criteria of global investors.
“The international funds have made it abundantly clear that they want to invest in gold mining companies with a diversified production base and economies of scale that enable costs to be kept as low as possible,” he said.
“The Jundee acquisition means Northern Star will tick all these boxes while still enjoying a conservative balance sheet and outstanding potential for growth through exploration at each of our five operating mines.”
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