Northern Star Resources says it has slashed its debt associated with the acquisition of the Paulsens gold mine by more than $4 million.
Northern Star Resources says it has slashed its debt associated with the acquisition of the Paulsens gold mine by more than $4 million.
Just one month after taking over the mine the company's outstanding balance has fallen to $10.65 million.
In a statement to the Australian Securities Exchange, Northern Star said the repayment compared to the minimum monthly principal installment of $2.5 million it is required to pay by lender RMB Resources.
Northern Star has now paid $24.2 million to Intrepid Mines for Paulsens.
See company statement below:
Overview
Northern Star Resources Ltd (ASX: NST) is pleased to advise that the bumper start to its ownership of the Paulsens Gold Mine in Western Australia has enabled the Company to slash the bank debt on the acquisition by $4.35 million in the first month, taking the outstanding balance to $10.65 million.
This repayment compared with the minimum monthly principal instalment of $2.5 million it is required to pay by lender RMB Resources.
The original $15 million debt comprised a $10 million acquisition facility and $5 million for working capital for Stage Two.
Northern Star purchased the Paulsens Gold Mine from Intrepid Mines. Intrepid estimated that the Stage 1 Mine Plan would see Paulsens produce 51,000 ounces over nine months beginning June 1, 2010.
The consideration was $35 million. As part of this, Northern Star linked 50 per cent of the acquisition price to gold production performance so that if the mine plan did not transpire then there were no payments. To achieve this outcome, both companies agreed to a $335/oz royalty capped at 51,000 ounces for a total of $17.1 million.
Northern Star has now paid $24.2 million to Intrepid Mines. This is broken down as follows;
$15 million reimbursement for the investment in Stage 1 mine plan
$1.5 million instalment at settlement
$7.7 million of gold production-based payments since Northern Star's financial benefit commenced.
This leaves $10.8 million remaining to be paid to Intrepid based on the Stage 1 mine plan. It includes the final $1.5 million instalment due 31 October 2010 and up to $9.3 million in gold production performance based payments. Northern Star expects this balance to be repaid by the end of the calendar year.
