Northern Star Resources plans to buy the high-grade Pogo gold project in Alaska from Sumitomo for $260 million. Sumitomo Metal Mining Co., the mine operator, holds an 85% interest and Sumitomo Corp. owns the remaining 15% interest. Northern Star said it seized what it believes to be an outstanding opportunity because Pogo meets all its key criteria, which centers on maximizing financial returns by owning and investing in Tier-1 projects in Tier-1 jurisdictions.

Northern Star Executive Chairman Bill Beament said Pogo is a world-class project with an 8-million-ounce-gold endowment, producing 3.8 million oz at 13.6 grams per metric ton (g/mt) over the past 12 years. He said the mine’s location in Alaska, a Tier-1 mining jurisdiction, is compelling.

Pogo is in the Tintina Mineral Belt, the metal province is a 200-km wide, 1,200-km-long arc stretching across much of the Alaskan interior to the southeastern Yukon. The region is host to mostly gold deposits, where more than 50 million oz of gold resources have been defined in the last 20 years, but also hosts copper, lead, zinc, silver and tungsten.

The Tintina Mineral Belt was the focus of the 1890s Klondike gold rush and has experienced a resurgence of activity since the late 1990s, stemming from major discoveries such as Donlin Creek, Fort Knox and the Casino deposits.

The terms of the acquisition and the potential to grow Pogo’s resources and reserves, mine life, production and cashflow made it an exceptional deal, according to Beament.

“All the metrics of this acquisition are enviable,” he said. “The price, at $63/oz, creates an opportunity to generate substantial value.”

“Pogo is a Tier-1 project in a Tier-1 jurisdiction with a long track record of producing about 300,000 oz/y,” he added. “Globally, there are only 17 mines that produce more than 300,000 oz/y in the Tier-1 jurisdictions of Australia, U.S. and Canada.”

And Pogo, along with their Jundee and Kalgoorlie operations, would give Northern Star the potential to have three mines producing that much.

Pogo is located 145 km southeast of Fairbanks. Underground production began in 2006 and ore is processed through a 1-million-mt/y capacity plant.

In 2017, Pogo produced more than 271,000 oz at an AISC of $882/oz from an average head grade of 10.8 g/mt.. As the end 2017, Pogo had resources of 3.34 million oz at 12.3 g/mt and reserves of 760,000 oz at 11.9 g/mt.

Completion of the acquisition is subject to minimal closing conditions with the acquisition expected to close in October.