Northern Star Resources is set to make the Kalgoorlie Super Pit an Australian-owned gold mine by acquiring Newmont Goldcorp’s stake in the historic Western Australian site for $US800 million ($1.17 billion).
The acquisition includes Newmont’s 50 per cent interest ($US775 million) in the Super Pit and additional associated assets ($US25 million) in the Kalgoorlie Consolidated Gold Mines joint venture.
Northern Star, which was also confirmed as a bidder for Barrick Gold’s half stake in KCGM earlier this year, will join Saracen Mineral Holdings as joint owners of the gold operations.
Saracen finalised an acquisition of Barrick’s 50 per cent stake for $US750 million last month.
Northern Star’s acquisition will give the company access to one of the most significant gold systems in the world, with a gold content of 45,000 to 60,000 ounces per vertical metre.
KCGM has produced on average 590,000 ounces per annum for the past two calendar years at an AISC of $US913 per ounce.
Perth-based Northern Star will fund the acquisition through a combination of a new debt facility worth $480 million, a fully underwritten institutional placement of $765 million and $5 million of cash reserves.
Northern Star executive chairman Bill Beament said the acquisition met the company’s key strategic objective of generating strong financial returns and growing its gold inventory from Tier 1 mines in Tier 1 locations.
“As well as being accretive across all key metrics, including earnings per share, this acquisition comes with huge upside due to the combination of the world-class nature of the gold system and the respective skill sets of Northern Star and Saracen,” Beament said.
“Both companies have established outstanding track records of unlocking value from acquisitions and I am delighted that we will be able to pool our skills and experience to create substantial value for our shareholders and the local community through both mine development and exploration.”
Northern Star believes the potential of KCGM shows short, medium and long-term growth, with further potential existing through optimising mining schedules, underground production, expanding its resource inventory and exploration.
The company expects its share of KCGM to add 120,000 to 140,000 ounces to its gold production in the 2020 financial year.
Northern Star will be a producer of more than one million ounces per annum of gold following the Super Pit acquisition, with four Tier 1 assets in Tier 1 locations.
The transaction is expected to be completed early next month and is subject to approval from the Western Australia Minister of Lands.
Newmont is currently managing the day-to-day operational activities through the KCGM Management Services Agreement.
As part of the Northern Star transaction, the company will receive key personnel from Newmont for six months to ensure the smooth transition of the asset and a separate parcel of nearby tenements 100 per cent owned by Newmont.
Newmont Goldcorp president and CEO Tom Palmer said Australia remained a core operating region for the company.
“…the sale of KCGM allows us to focus on investing in profitable growth and long-term value creation at our top-tier Tanami and Boddington complexes, in addition to our active exploration campaigns across the region,” Palmer said.
Northern Star has also been granted an option to acquire Newmont’s power business in Western Australia that supplies KCGM for US$25 million.