Northern Star Resources has continued its aggressive expansion strategy, announcing it will buy the Jundee gold mine in Western Australia from Newmont Mining for $82.5 million.
Northern Star Resources has continued its aggressive expansion strategy, announcing it will buy the Jundee gold mine in Western Australia from Newmont Mining for $82.5 million.
The purchase follows Northern Star's $75 million purchase in January of Barrick Gold's majority stake in the East Kundana joint venture and the Kanowna Belle mine.
Northern Star also bought Barrick's Plutonic gold mine in December last year for $25 million.
The Jundee acquisition is expected to lift Northern Star's annual production from about 350,000 ounces to 550,000oz in the 2015 financial year.
The miner claims this would make it the second biggest gold producer listed on the ASX.
It would also make the company the fourth biggest gold mine operator in WA, according to Business News IQ research, behind Newmont, Gold Fields and Newcrest Mining.
Northern Star managing director Bill Beament said the purchase would allow the company to deliver the scale of production required to attract global investors.
"The international funds have made it abundantly clear that they want to invest in gold mining companies with a diversified production base and economies of scale that allow costs to kept as low as possible," he said.
"The Jundee acquisition means Northern Star will tick all these boxes while still enjoying a conservative balance sheet and outstanding potential for growth through exploration at each of our five operating mines."
Business News reported in March that Northern Star was targeting one more acquisition to lift its production to between 500,000oz and 600,000oz per year.
Northern Star has received a commitment from Investec Bank Group to increase its debt facility to $100 million to partially fund the acquisition, along with existing cash reserves.
It expects to have a cash position of about $40 million following the purchase, with its debt facility drawn down to $70 million.
The Jundee mine, located about 500 kilometres north of Kalgoorlie, produced 279,000oz of gold in the 2013 calendar year.
Mining is expected to continue solely through underground operations, with Newmont staff transferred to Northern Star as part of the deal.
Completion of the deal is expected in early July.
JP Morgan is acting as corporate adviser to Northern Star for the deal.
Northern Star shares were trading 6 cents higher at $1.175 at 9.26am WST.
