Aussie gold mining mega-merger overwhelmingly backed by shareholders

The merger of two major Australian gold miners to create a $16bn global top-10 producer has been overwhelmingly backed by shareholders.

Shareholders in Saracen Mineral Holdings have overwhelmingly voted in favour of merging with the gold miner’s joint venture partner at the massive Super Pit in Western Australia, a tie-up that was immediately feted as making perfect sense.

Saracen and Northern Star Resources announced the plan in October, proposing the latter’s investors would own 64 per cent of the combined entity, while Saracen shareholders would hold the remaining 36 per cent.

Saracen shareholders threw their support behind the deal at a virtual meeting on Friday.

It will create a global top-10 gold producer and Australia’s second biggest miner of the precious metal behind Newcrest, with a market capitalisation of $16bn.

The merger will bring Kalgoorlie’s famous “Golden Mile” – one of the richest gold deposits in the world – under one owner for the first time in its 125-year-plus history.

At the heart of the Golden Mile is the Super Pit, an underground mine so colossal it attracts tourists.

It is Australia’s biggest gold mine, measuring a whopping 3.5 kilometres long, 1.5 kilometres wide and more than 600 metres deep.

After the Golden Mile’s initial discovery in the late 1800s, a gold rush ensued, and the idea of creating the Super Pit to amalgamate various operations into one epic open pit was hatched by the late Alan Bond in the 1980s.

Most of Northern Star and Saracen’s other assets are close by.

Announcing the “merger of equals”, Saracen managing director Raleigh Finlayson said the deal was one of the most logical and strategic tie-ups the mining industry had seen, with pre-tax “synergies” calculated at $1.5bn to $2bn over the next 10 years.

Both companies also expect benefits from combining the skills and experience of the two management teams.

The two companies had been in discussions over a potential merger since earlier this year, after the pair had finalised their combined $2.2bn acquisition of the Kalgoorlie Super Pit from US majors Barrick and Newmont, and had begun to consider the future of the iconic mine.

Saracen bought its stake in the Super Pit from Canada’s Barrick Gold in November 2019, and Northern Star acquired its interest from US-based Newmont two months later, bringing the asset back into wholly Australian hands for the first time in its 31-year history.

The companies have a mine plan beyond the 2034 financial year based on current ore reserves.

Northern Star founder Bill Beament will remain the company’s executive chairman until mid-2021, before moving to a non-executive role, with Mr Finlayson acting as its managing director.

Saracen shares edged back 0.2 per cent on Friday, to $4.81, as the gold sector softened in the wake of US President-elect Joe Biden’s $US1.9 trillion ($2.5 trillion) stimulus plan.

Northern Star slipped 0.9 per cent to $12.72.

Originally published as Aussie gold mining mega-merger overwhelmingly backed by shareholders