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Northern Star Agrees $77 Mln Deal for Newmont Gold Mine

Northern Star Resources Ltd., an Australian gold producer, plans to buy a Newmont Mining Corp. asset for A$82.5 million ($77 million), its third acquisition since December.

The purchase of the Jundee gold mine in Western Australia would lift output to about 550,000 ounces a year from 350,000 ounces a year, making Northern Star the nation’s second-largest publicly traded producer, the Perth-based company said today in a statement.

Global gold producers have proposed or completed acquisitions worth $5.3 billion this year, according to data compiled by Bloomberg, as the bigger companies shed assets to cut costs after the metal last year had its largest annual decline in more than three decades. Newmont said the deal takes the proceeds it has got from recent asset sales to $800 million.

“International funds have made it abundantly clear that they want to invest in gold mining companies with a diversified production base and economies of scale that enable costs to be kept as low as possible,” Managing Director Bill Beament said in the statement. “The Jundee acquisition means Northern Star will tick all these boxes.”

BlackRock Inc., the world’s biggest fund manager, increased its holding in March to become the producer’s largest shareholder, according to filings and data compiled by Bloomberg. Northern Star rose 7.6 percent to A$1.20 in Sydney trading. It’s advanced 53 percent this year.

Jundee, which began production in 1995, had an output of 279,000 ounces of gold in the 12 months to Dec. 31 and may yield 200,000 ounces over the next two years, Northern Star said today in a statement.

Generational Change

The deal, which is expected to be completed by July, will include a further payment of about $14 million for working capital, Newmont said in a statement.

Northern Star agreed in January to pay A$75 million for Barrick Gold Corp.’s Kanowna assets after it said a month earlier it would purchase the same company’s Plutonic mine for A$25 million.

“It is a once-in-a-generational change in the ownership in the Australian gold space at the moment,” Beament said in an interview last month.

Northern Star, which raised about A$130 million in two share sales this year, will fund the acquisition from cash reserves and an increased debt facility, it said in the statement. The producer has agreed an increased facility with Investec Bank Group of A$100 million, it said.

JPMorgan Chase & Co.’s Australian unit is advising the producer on the acquisition, Northern Star said.

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