Northern Star Resources to sell off Plutonic gold mine

THE BOURSE WHISPERER: A crowd gathered around the Diggers and Dealers booth of Northern Star Resources (ASX: NST) after the announcement the company has struck an agreement-in-principle to sell its Plutonic gold mine in Western Australia.

The transaction is subject to the execution of a legally-binding conditional Sale and Purchase Agreement (SPA), which is expected to be signed shortly with Billabong Gold Pty Ltd, a wholly owned Australian subsidiary of Canadian parent company – 2525908 Ontario Inc.

As a result of the proposed sale, Northern Star said its production guidance for the current financial year would be 485,000 to 515,000 ounces at an all-in sustaining cost of $1,000 to $1,050 per ounce (US$728-765/oz).

In FY16, Northern Star produced 561,153 ounces at an all-in sustaining cost of $1,041 per ounce (US$758/oz).

Northern Star indicated its future production will now come from the three concentrated centres of Jundee, Kalgoorlie and Paulsens with the company looking to achieve an annual production rate of approximately 600,000 ounces for calendar year 2018 compared with its previous target of around 700,000 ounces, of which Plutonic was expected to contribute 100,000 ounces.

For now the company intends to increase exploration activity at each of these centres as part of its ongoing strategy to drive organic growth with the plan to spend $60 million on exploration and a further $70 million on expansionary capital for future production growth this financial year.

Northern Star Resources managing director Bill Beament said the sale would re-shape Northern Star’s asset base around the three key production centres of Jundee, Kalgoorlie and Paulsens with the Central Tanami being the potential fourth centre.

“Our focus is shifting to concentrated centres of production with each meeting the criteria of significant production scale and substantial exploration upside,” he said in the company’s announcement to the Australian Securities Exchange.

“We believe this structure and strategy will meet the evolving demands of global investment institutions.”