Northern Star Expanding Through Mine Acquisitions

Northern Star Resources announced purchase of the East Kundana joint venture and Kanowna Belle mines from
Barrick Gold for A$75 million. The transaction is expected to close in March. Pictured above is the Kanowna Belle
underground mine, located 18 km northeast of Kalgoorlie in Western Australia. (Photo courtesy of Barrick Gold)
Northern Star Resources has agreed to purchase Barrick Gold’s Plutonic gold mine, its 51% interest in the East Kundana joint venture (EKJV), and its Kanowna Belle gold mine, all in Western Australia. The acquisitions will lift Northern Star’s annual gold production to more than 350,000 oz/y.

Prior to the acquisitions, Northern Star was a one-mine company, owning and operating the Paulsens underground gold mine in Western Australia. In Northern Star’s fiscal year ended June 30, 2013, Paulsens produced 88,614 oz of gold.

Northern Star’s purchases were announced as two separate transactions.

On December 23, 2013, the company announced purchase of the Plutonic mine for A$25 million. That purchase was expected to close in February.

On January 23, the company announced purchase of the EKJV and Kanowna Belle for a total of A$75 million. That purchase was expected to close in March.

Plutonic is an underground mine located 180 km north of Meekatharra, Western Australia. It produced about 114,000 oz of gold in 2013.

The EKJV is located 20 km west of Kalgoorlie and includes the operating Raleigh and Rubicon Hornet mines and the new, high-grade Pegasus discovery. Pegasus, which is currently the subject of a feasibility study, can be accessed underground from the Rubicon mine and brought into production quickly and for a relatively low capital cost. Initial resources at Pegasus stand at 355,000 oz in material grading 10 g/mt gold, with potential to grow substantially.

Kanowna Belle is an underground mine located 18 km northeast of Kalgoorlie.

Production from Barrick’s 51% interest in the EKJV and 100% interest in Kanowna Belle during calendar year 2013 totaled about 225,000 oz. This is expected to fall to 175,000 oz in 2014 as production is reduced at Kanowna Belle.

Following closure of both transactions, Northern Star’s gold reserves will increase to 1.1 million oz, and its gold resources will increase to 5.6 million oz.

Several Northern Star executives, including its managing director Bill Beament, have held senior positions at the Barrick mines. Following announcement of acquisitions, Beament said, “These transactions ensure that Northern Star meets the demands of domestic and international investors with respect to critical mass, multiple operations, low costs, consistent dividends and strong growth prospects.”

As featured in Womp 2014 Vol 02 -