Northern Star brings Kalgoorlie’s Super Pit under Australian control in new $1.2bn deal
A new billion-dollar deal confirms Kalgoorlie’s iconic Super Pit mine will be totally Australian owned for the first time.
Northern Star Resources has confirmed that Kalgoorlie's iconic Super Pit is set to return to Australian hands, saying it will pay $US775m ($1.2bn) for Newmont’s half of the massive gold mine.
Northern Star launched a $815m capital raising to fund the acquisition on Tuesday, seeking $765m through a $9 a share placement and saying it would offer $50m worth of stock to existing shareholders in a share purchase plan at the same price.
The WA-headquartered gold miner will also take $480m worth of new debt to fund the acquisition.
Northern Star will pay Newmont a total of $US800m, picking up a suite of nearby exploration tenements and an option to buy the power plant that supplies the Super Pit.
The WA gold miner had $372m in cash at the time of its November annual shareholder meeting, according to a company presentation, with no debt.
With Saracen Mineral Holding’s having paid $US750m for Barrick's’ half of the Super Pit in November, Northern Star’s move means the Super Pit become wholly Australian-owned for the first time its operating life.
The mine was the brainchild of Perth corporate raider Alan Bond, who spent much of the 1980s buying up the tenements that make up the mine. Half of the project was acquired by US gold major Homestake before the mine began production in 1989 and, although it remained half-owned by Australia’s Normandy Gold until 2002, it became solely foreign owned when Normandy was swallowed up by Newmont in 2002.
The square mile around the discovery has produced more than 61 million ounces of gold, with more than 21 million from the Super Pit itself.
Northern Star boss Bill Beament said the acquisition would create substantial value and provide enormous short, medium and long term opportunities for the company.
“This is one of the world’s great gold systems, as shown by its 80 million ounce endowment and the fact that it contains up to 60,000 ounces per vertical metre,” he said.
This acquisition comes with huge upside due to the combination of the world-class nature of the gold system and the respective skill sets of Northern Star and Saracen.”
It is understood Newmont boss Tom Palmer was in Perth last week, although it is not clear whether he met with Northern Star or new partner – albeit a fleeting one – Saracen.
Northern Star’s offer, like that of Saracen, is also play on the belief the Kalgoorlie mine is far from tapped, despite having already produced more than 21 million ounces of gold over its 30-year life.
Sources say the pair suspect another 10 to 15 million ounces of easily available gold sits outside the current mine plan, mostly to the south of the existing pit, with Newmont likely to have released updated resources and reserves at the end of 2019.
Having two homegrown companies in charge, both with strong exploration track records, is also likely to accelerate drilling around the pit – possibly including a long-mooted campaign to test theories Kalgoorlie hosts a parallel deposit of similar size under its streets.
And, depending on negotiations with new partner Saracen, the acquisition could also solve some of Northern Star’s ongoing issues with processing capacity constraints at its nearby Kanowna Belle and East Kundana operations, about 18km away from the Super Pit.
Northern Star shares last traded at $9.65.
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