Northern Star, Saracen anticipate mega merger opportunity

Saracen Mineral Holdings managing director Raleigh Finlayson has highlighted “future proofing” and “organic growth” as key outcomes to come from the company’s $16 billion merger-of-equals with Northern Star Resources.

The two companies delivered a combined presentation at Diggers & Dealers 2020 yesterday, following last week‘s announcement that the two Super Pit owners had agreed to a merger.

According to Finlayson, organic growth played a major part in securing the merger.

“The only companies I can think of — number one and number two — (are) Northern Star and Saracen for that future growth profile, which is obviously more of a compelling reason why we’re bringing the two companies together,” he said.

Finlayson said future proofing was also a “key ingredient” to the merger, adding there was a “much higher potential than the $1.5 to $2 billion in synergies” as mentioned in the proposed merger’s initial announcement.

“Saracen has gone along in future proofing so investing money now with strong prevailing gold price (will) underpin and secure us through the future regardless of what the gold price is,” he said.

“There’s lots of work to do over the course of the next twelve months to fully optimise that but we have significant opportunities that frankly very few of those are fully reflective of the 1.5 to 2 billion dollars of MPV (market potential value) synergies that we’ve articulated to the market this week.

“One of the other key ingredients of our merger is Saracen has invested in the future and an increase in grade over the next five years.”

Northern Star executive chair Bill Beament will chair the merged company, while Saracen managing director Raleigh Finlayson will become managing director for the first 12 to 18 months.

The proposed merger will consolidate Kalgoorlie’s Golden Mile under a single owner, with the merged board including five Northern Star directors and four Saracen directors.

“(The) 1989 KCGM was formed as a consolidation of the Golden Mile. This is actually the true consolidation of the Golden Mile of Kalgoorlie and hence the name ‘Kalgoorlie Consolidated Gold Mines’ will live on and will be referred to that entire operation,” Finlayson said.

There will be scope beyond the Golden Mile, with Northern Star’s Pogo operation also sharing future growth benefits.

“We see (Pogo) as an absolute beachhead for future growth into the future after we ramp up to 300,000 ounces,” he said.

All assets under the merger will be exclusive in tier 1 jurisdictions.

Northern Star executive chair Bill Beament said the two companies would combine to create a risk and opportunity culture.

“The way Saracen team addressed the opportunity was looking at all the risks here as Northern Star looked at all the opportunities. So blending that risk and opportunity culture in I think is going to create an absolute mega opportunity for every stakeholder associated with this business,” he said.

“We will be the sixth largest gold producer by market cap and we’re eighth on a production basis and growing further as we hit our 2 million ounces in the coming years.”

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