Northern Star buys big at Barrick’s bargain sale

THE BOURSE WHISPERER: Northern Star Resources (ASX: NST) is to acquire 51 per cent of the East Kundana Joint Venture (EKJV) in Western Australia from Barrick Gold Corporation.

Northern Star said the deal is set to make it the fifth-largest ASX-listed gold miner, taking its annual production to more than 350,000 ounces of gold per annum.

The price tag on the acquisition is $75 million, which also includes 100 per cent of the Kanowna Belle gold mine.

The addition of Kanowna Belle alone is expected to increase Northern Star’s total reserves by 134 per cent to 1.1 million ounces and its resource base by 43 per cent to 5.6 million ounces.

The EKJV, which is located 20km west of Kalgoorlie, comprises the operating Raleigh and Rubicon-Hornet mines as well as the new Pegasus deposit.

It is forecast to produce 70,000 to 75,000 ounces this financial year at an all-in sustaining cost of $800 to $950 per ounce.

“The East Kundana JV acquisition makes Northern Star a major Australian gold miner that will appeal very strongly to major global investors,” Northern Star Resources managing director Bill Beament said in the company’s announcement to the Australian Securities Exchange.

“The transaction ensures that Northern Star meets the demands of domestic and international investors with respect to critical mass, multiple operations, low costs, consistent dividends and strong growth prospects.”

According to Beament, Pegasus is one of the most outstanding and highest grade gold discoveries in Australia in the past 10 years.

“The high grades at Pegasus and its close proximity to existing mine infrastructure mean production costs will be among the lowest in the Australian gold industry,” he said.

“There is also huge potential to grow the Pegasus resource to one million ounces and beyond, ensuring it is an essential long term asset of Northern Star’s business.”

Northern Star also announced a Placement to raise approximately $100 million at a price of 86 cents per share as well as offering a Share Purchase Plan to existing investors capped at raising $15 million.

The company said proceeds raised from the Placement and SPP will go towards paying for the acquisition and associated transaction costs and taxes as well as for general working capital purposes.