Following the merger, Northern Star will acquire 100% of the shares of Saracen, which owns 50% of the Super Pit operation (above). (Photo: Saracen)
Northern Star Resources Ltd. and Saracen Mineral Holdings Ltd. have agreed to a merger. Northern Star will acquire 100% of the shares in Saracen. Saracen shareholders will receive 0.3763 Northern Star shares for each Saracen share held. Saracen will also pay a special, fully franked dividend of A3.8¢ per Saracen share. Upon completion of the transaction, Northern Star will own 64% of the combined company, and Saracen will hold the remaining 36%.
The companies said the merger will create a top 10 global major gold producer, with high-margin assets located exclusively in Tier-1 jurisdictions. Saracen has three operations within 300 kilometers (km) of Kalgoorlie: Carosue Dam, Thunderbox and 50% of the Super Pit. Production is slated to grow from more than 500,000 ounces (oz) in the current financial year to more than 600,000 oz in the following year. Northern Star operates three concentrated centers: Jundee; Kalgoorlie including Kanowna Belle, Kundana (the East Kundana Joint Venture), South Kalgoorlie and KCGM (joint venture); and Pogo operations.
Both the Saracen and Northern Star boards have unanimously recommended the merger.
Under the agreement, Northern Star Executive Chair Bill Beament will be the chair of the merged group, transitioning from executive to non-executive chair in July 2021. Saracen Managing Director Raleigh Finlayson will be managing director. Stuart Tonkin will be chief executive officer and Morgan Ball will be chief financial officer. Upon completion, the board of nine will comprise of five Directors from Northern Star and four directors from Saracen. Saracen Non-executive Chair Tony Kiernan will be the lead independent non-executive director.
“Northern Star has only ever pursued growth when it will create value for shareholders, and this merger of equals will create an abundance of value for both Northern Star and Saracen shareholders,” Beament said. “This is significant value-creating M&A (merger and acquisition).”
Pretax synergies are expected to be worth A$1.5 billion to A$2 billion over the next 10 years, according to Finlayson.
“This is one of the most logical and strategic M&A transactions the mining industry has seen,” Finlayson said. “The savings, the synergies and the growth opportunities it will generate make the transaction extremely compelling.
The merger will create a combined portfolio of high-quality assets concentrated in three logical production centers exclusively in Tier-1 jurisdictions and a presence in the West Australian Goldfields, with the transaction consolidating KCGM — the iconic “Golden Mile” — under single ownership for the first time in its more than 125-year history.
