07/01/2014 - 11:43

Northern Star tips strong production in 2014

07/01/2014 - 11:43

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Northern Star Resources expects to almost double its annual gold production to more than 200,000 ounces following its $25 million purchase of the Plutonic gold mine from Barrick Gold.

Northern Star tips strong production in 2014
Northern Star Resources managing director Bill Beament.

Northern Star Resources expects to almost double its annual gold production to more than 200,000 ounces following its $25 million purchase of the Plutonic gold mine from Barrick Gold.

The deal, announced just before Christmas, will see Northern Star boost its total resource-reserve inventory by 80 per cent to 4 million ounces.

The $25 million purchase price will be funded from the company's existing cash reserves, which stood at $45 million as of 30 September last year.

The purchase price equates to $14 per resource ounce, based on Plutonic's current resources of 1.75 million ounces.

Northern Star has forecast Plutonic's all-in sustaining costs to range between $1,050/oz and $1,200/oz.

This compares to the $996/oz all-in sustaining costs recorded at Northern Star's existing Paulsens mine in the September quarter.

Several of Northern Star's senior management personnel held senior roles at Plutonic in previous careers, including managing director Bill Beament who spent two years at the mine as project manager.

"Plutonic is the ideal acquisition for Northern Star in every respect," Mr Beament said.

"It delivers strong production and cashflow today, it comes with outstanding exploration potential, it provides scope for efficiency gains using our underground mining expertise and we know the project extremely well due to the substantial time we spent working there in previous careers."

The purchase includes a 3 million tonne per annum processing plant, an underground mobile fleet, a 15 megawatt gas fired power station, an 8MW diesel back up station and a 600-person accommodation village.

The transaction is expected to settle next month, subject to customary closing conditions.

RBC Capital Markets is acting as financial adviser and Ashurst is acting as legal adviser with respect to the transaction.

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