Officials at Northern Star Resources Ltd have announced the acquisition of Western Australia’s Plutonic gold mine from Barrick Gold Corp. for $25 million; the deal will transform Northern Star into a top-four Australian gold-only producer with annual production exceeding 200,000 oz. with a total resource reserve of 4 million oz.
The agreement, according to Northern Star representatives, strongly resembles the company’s acquisition of its Paulsens gold mine at the end of Q2 2010. Similarly, they noted, Plutonic enjoys a strong cashflow from existing production while offering significant scope to increase mine life through exploration.
Northern Star staff enjoys a close history with the Plutonic project, according to company officials. Managing Director Bill Beament, for one, worked as its project manager for two years; Technical Services Manager Bernie Sostak, meanwhile, served as Chief Geologist at Plutonic for eight years.
To this end, “Plutonic is the ideal acquisition for Northern Star in every respect,” Beament said. “It comes with outstanding potential, it provides efficiency gains using our underground mining expertise and we know the project extremely well” while “delivering superior financial returns from high-grade, low-cost gold mines in Australia.”
Northern Star will fund the purchase with existing cash reserves, which stood at $45 million at Q4 2013. The price is equal to $14 per resource oz. purchased based on Plutonic’s current resources of 1.75 million oz at 10.8 g/mt gold. Plutonic’s all-in sustaining costs are forecast between $1,050/oz and $1,200/oz. following planned productivity and efficiency measures.
The acquisition price includes a fully operational mine with a 3 million mt/y processing plant, an underground mobile fleet, a 15 Megawatt (MW) gas-fired power station, an 8-MW diesel back up station and a 600-person accommodation village.
Since 1993, Plutonic has consistently produced in excess of 100,000 oz/y with a life-to-date production of 5.24 million oz of gold.