Super merger: Northern Star and Saracen to join forces

Super Pit joint owners Northern Star and Saracen Mineral Holdings are set to combine, having agreed to a merger-of-equals worth $16 billion.

The proposed merger will create a new top 10 global gold major with a world-class portfolio and three large-scale production centres in Kalgoorlie and Yandal in Western Australia, as well as in North America.

For the first time in its 125-year history, Kalgoorlie’s famous Golden Mile will be consolidated under one owner as a result of the Northern Star and Saracen merger.

Northern Star executive chair Bill Beament will chair the merged company, while Saracen managing director Raleigh Finlayson will be managing director. Northern Star chief executive officer Stuart Tonkin will continue his role in the merged company, as will Saracen chief financial officer Morgan Ball.

The merged board will comprise five Northern Star directors, including Beament, and four Saracen directors, including Finlayson.

Saracen’s board of directors has unanimously recommended that its shareholders vote in favour of the merger-of-equals.

“The benefits which will flow to Saracen shareholders from this merger are significant,” Finlayson said. “This is one of the most logical and strategic merger and acquisition (M&A) transactions the mining industry has seen.

“The savings, synergies and growth opportunities it will generate make the transaction extremely compelling. In short, it is a unique opportunity for Saracen shareholders unlikely to be replicated via any other avenue.”

Beament also commented on the value of the merger, stating that it would “create an abundance of value for both Northern Star and Saracen shareholders”.

“Northern Star has only ever pursued growth when it will create value for shareholders,” he said. “This is significant value-creating M&A.”

“Our position as joint venture partners at Kalgoorlie Consolidated Gold Mines (KCGM), the close proximity of the majority of the combined company’s assets and a host of other synergies makes this a unique opportunity exclusive to Saracen and Northern Star shareholders.”

Northern Star operates two concentrated centres in Western Australia, including the Super Pit and the East Kundana joint venture. It also holds the Pogo mine in the Tintina gold province in Alaska, where it produced 159,344 ounces in 2019.

Saracen owns three operations within 300 kilometres of Kalgoorlie: Carouse Dam, Thunderbox and its 50 per cent stake in the Super Pit.

The two gold miners first joined forces at the Super Pit late last year when they purchased Newmont and Barrick Gold’s stakes in KCGM.

Since the acquisition, the Super Pit guided Saracen to record production seven months later, with the company producing 520,414 ounces across its operations in the 2020 financial year.

Northern Star has also reaped the rewards of the acquisition, selling 115,825 ounces of gold from the Super Pit during the 2020 financial year, contributing to its record 900,388 ounces of gold sold.

Under the proposed deal, Northern Star will acquire 100 per cent of the shares in Saracen, with Saracen shareholders to receive 0.37 Northern Star shares for each share they hold.

If approved, Northern Star shareholders would own 64 per cent of the combined entity and Saracen shareholders the remaining 36 per cent.

The first court hearing for the merger will take place in December with the implementation date scheduled for February 2021.

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