08/03/2018 - 09:45

Northern Star acquires $80m mine

08/03/2018 - 09:45

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Gold miner Northern Star Resources has agreed to purchase the South Kalgoorlie mine from Westgold Resources in a cash and scrip deal worth $80 million.

Northern Star acquires $80m mine
The Jubilee mill is part of the South Kalgoorlie operations

Gold miner Northern Star Resources has agreed to purchase the South Kalgoorlie mine from Westgold Resources in a cash and scrip deal worth $80 million.

The mine is located 50 kilometres from Northern Star’s Kundana operations, which is currently producing between 30,000 and 40,000 ounces per annum.

Under the agreement, Northern Star will pay $20 million in cash and issue 9.5 million shares at a 10 day volume-weighted average price of $6.30.

The acquisition comprises the project’s operating processing facility, which has an annual throughput capacity of 1.2 million tonnes, a resource of four million ounces and a prospective gold tenure.

Executive chairman Bill Beament said the acquisition would ensure Northern Star meets its production target.

“Our highly successful exploration strategy in Kalgoorlie has generated huge growth in our inventory and paved the way for us to grow production there to 300,000 ounces per annum,” he said.

“To capitalise on this success, we were considering the option of expanding our Kanowna Belle facility.

“However, the South Kalgoorlie operations purchase will enable us to achieve our organic growth target in a more timely and economical fashion and at the same time provide us with significant exploration potential, including a resource inventory.”

Westgold managing director Peter Crook said the deal was mutually beneficial.

"It provides Northern star with additional and instant plant capacity in the Kalgoorlie region for its expanding gold operations," he said.

"For Westgold, it divests our shortest life asset, provides a cash boost and upgrades the overall quality of our gold portfolio."

The acquisition is due to be finalised by April.

 

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