Northern Star Resources has signed a conditional sale and purchase agreement to sell its Plutonic gold mine in Western Australia to Billabong Gold Pty Ltd. Billabong is an Australian company controlled by Toronto-based mining executive Chris Bradbrook. The buyer’s intention following completion of the transaction is to list Billabong’s parent company, 2525908 Ontario Inc., on the Toronto Stock Exchange or the TSX Venture Exchange. Under the terms of the sale, Northern Star will emerge as a significant shareholder in this publicly-listed company, giving it an ongoing exposure to the Plutonic mine’s future production and exploration success.
Consideration for the transaction values Plutonic at about A$66.2 million in cash, shares, and contingent payments.
In Northern Star’s fiscal year to June 30, Plutonic produced 76,226 oz of gold in ore and sold 64,180 oz at all-in sustaining costs of A$1,738/oz. As a result of the proposed sale, Northern Star’s production guidance for its current financial year is 485,000 to 515,000 oz at all-in sustaining costs of A$1,000 to A$1,050/oz, deriving from four operational centers in Western Australia: Kalgoorlie, Jundee, Central Tanami, and Paulsens.
Northern Star is increasing its exploration intensity at each of these centers as part of an ongoing strategy to drive organic growth. The company will spend A$60 million on exploration and a further A$70 million on expansionary capital for future production growth this financial year.
Northern Star Managing Director Bill Beament said the Plutonic sale represented an outstanding result for the company on every level: “The terms of the sale are attractive for Northern Star shareholders both in terms of the price we have received and the continuing exposure we have to Plutonic’s growth. It also allows us to focus our resources on our four concentrated centers, while maintaining downward pressure on our already-low overall cost profile.”
Plutonic mine operations are located approximately 850 km north-northeast of Perth in the Eastern Gascoyne region of Western Australia. Currently, the mine produces around 850,000 mt/y of ore from mechanized, underground mining. Longhole stoping is the main mining method, with a number of stoping techniques utilized to address variations in orientation and shape of the stopes. Due to these variations, stope size varies from about 500 mt to about 10,000 mt, with some occasional stopes of up to 20,000 mt.
Plutonic ore is processed through a conventional carbon-in-leach plant that has a hard-rock processing capacity of approximately 2.0 million mt/y. Processing at the current rate at 850,000 mt/y leaves substantial unused capacity that could be reactivated should additional plant feed become available.