Northern Star Resources Ltd. (NST), an Australian gold producer that’s agreed deals to buy assets from Barrick Gold Corp. (ABX), is seeking further acquisitions after raising about A$130 million ($120 million) in share sales.
“We could easily do a deal on our balance sheet of up to a couple of hundred million dollars now if there was something that warranted that,” Managing Director Bill Beament said today in a phone interview from Perth.
Gold producers have proposed or completed acquisitions worth $5.3 billion so far this year as the value of deals rebounds, according to data compiled by Bloomberg. Miners are adjusting portfolios as they seek to cut costs after the metal slumped last year to its largest annual decline in more than three decades.
“It is a once-in-a-generational change in the ownership in the Australian gold space at the moment. Will it be around in 12 to 18 months? I’m not quite sure it will be,” Beament said. “While gold is, at the moment, counter-cyclical then you’d be mad not to keep looking.”
Northern Star fell 5 percent to close at A$1.135 in Sydney. BlackRock Inc. (BLK), the world’s biggest fund manager, has a 14.2 percent stake in Northern Star and is its largest holder, according to data compiled by Bloomberg.
The Perth-based producer agreed in January to pay A$75 million for Barrick’s Kanowna assets after it said a month earlier it would purchase the same company’s Plutonic mine for A$25 million. Northern Star is seeking to expand output to as much as 600,000 ounces of gold a year, from a current capacity of about 350,000 ounces to 400,000 ounces, Beament said.
Barrick, the world’s biggest gold producer, and Newmont Mining Corp. (NEM) considered a spin off of assets including some in Australia under now aborted talks to merge the two companies, according to two people with knowledge of the matter.
Newmont’s Australian mines may be too large to fit Northern Star’s strategy, according to Beament.
Northern Star raised about A$130 million in two share sales this year and has cash, bullion and investments of A$80 million, the company said today in a statement. “It gives us firepower to do something substantial if we wanted to,” Beament said.
The producer hedged about 100,000 ounces of output for 12 months from January at a price of A$1,462 an ounce, according to a February filing. It sees gold as trading between A$1,350 to A$1,450 an ounce over the next 12 months, Beament said. Gold in Australia dollar terms traded at A$1,400.43 an ounce at 2:55 p.m. in Sydney and has advanced 4 percent this year.
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