THE market should expect gold miner Northern Star Resources to make an acquisition soon, according to managing director Bill Beament.
Mr Beament said he would be disappointed if the company wasn’t involved in a transaction in at least the next 12 months, after its $45 million institutional placement last month.
The company, which now has $80 million in the bank, is planning to strengthen a portfolio highlighted by the Paulsens gold project in the Pilbara.
Northern Star bought Paulsens from Intrepid Mines in mid-2010 for $40 million – a figure some at the time considered an overpayment.
The company proved otherwise, taking seven months to pay off the acquisition and then finishing the 2011 financial year with a $20 million profit.
Despite this, Mr Beament is adamant the job of developing the company is only halfway complete.
In his eyes the company reached a turning point in its growth through the placement to the UK institutions.
He said Northern Star committed to the raising to transform the company’s shareholder structure and to open up future funding opportunities.
“We’ve been working for eight or nine months to change our investor base,” Mr Beament told WA Business News. “We’ve had a fantastic major shareholder and investor; an incubator of small companies or projects in the early stage.
“They’ve done a great job but it was no secret they couldn’t take us to that next level of company we want to be.”
The next level Mr Beament speaks of is that reached by the likes of Saracen Mineral Holdings, Silver Lake Resources, St Barbara and Troy Resources.
“I’ve said to everyone this is the year I want to catch up to our peers,” he said.
Even without an acquisition, Northern Star has outlined a growth plan that would see it become a 200,000-ounces-a-year producer.
In the 2011 financial year, Paulsens produced 89,069oz and is on course to grow to about 100,000oz/year through an expansion plan.
The company has upgraded the Paulsens resource to 318,000oz and drilling results released this week have laid the foundations to increase that figure further, according to Mr Beament.
Northern Star is planning to cover the remaining 100,000oz through the development of its Ashburton prospect, located near Paulsens.
Despite the optimism for organic growth, Mr Beament remains focused on finding a suitable acquisition.
He said since the company announced the raising a range of opportunities had appeared.
“Lots of opportunities have come across the table because we have cash in the bank and we have a team that can deliver on that,” Mr Beament said.
“It has been poles apart from the past 12 months. Having the extra cash has really given us a war chest to take the company to the next level.”
Patersons analyst Gary Watson believes the timing was right for Northern Star to bolster the institutional presence on its register, given the company’s expansion aspirations.
Mr Watson said its goal to produce 100,000oz/year at Paulsens looked achievable, while Ashburton was less of a certainty to reach the overall aim of 200,000oz/year.
He added if the deals done to acquire Paulsens and Ashburton were any indication, the company’s next purchase would also be value-accretive.
“Northern Star has demonstrated they are able to spot projects that aren’t meeting their full potential,” Mr Watson said.
“They haven’t really gone into any greenfields exploration so I would say buying an underperforming or underutilised asset and turning it around is their forte.”
Northern Star’s progress at Paulsens has been a Western Australian success story in terms of a miner buying an existing project and making it profitable.
