Northern Star announces sale of Plutonic mine

JOHANNESBURG (miningweekly.com) – Western Australian gold miner Northern Star has announced the planned sale of its Plutonic gold mine, to reshape its focus around three concentrated operational centres – Jundee, Kalgoorlie and Paulens, with Central Tanami potentially a fourth.

MD Bill Beament said on Monday that Northern Star had received an “attractive offer” for Plutonic, but that the sale was still subject to the execution of a legally binding conditional sale and purchase agreement.

The proposed buyer is Billabong Gold, a wholly owned Australian subsidiary of Canadian company 2525908 Ontario, which is controlled by Toronto-based mining executive Chris Bradbrook.

“Our decisions are governed first and foremost by our commitment to maximising financial returns, not headline production figures. The attractive offer we have received for Plutonic means that selling the project is entirely consistent with our goal of managing our portfolio in a way which maximises financial returns and, therefore, we are accepting it,” said Beament.

Selling the 100 000 oz/y Plutonic mine would result in Northern Star producing 600 000 oz/y in 2018, compared with a previous target of 700 000 oz. However, the company would remain a member of the world’s Top 25 gold miners, based on production, but its costs would be lower.

The miner forecast production of 485 000 oz to 515 000 oz at an all-in sustaining cost (AISC) of A$1 000/oz to A$1 050/oz for the 2017 financial year, compared with 561 153 oz at an AISC of A$1 041/oz in the 2016 financial year.

Northern Star explained that it had regrouped its Kanowa, Kundana joint venture (JV) and Kundana tenements into one operational centre, called Kalgoorlie.

“Our focus is shifting to concentrated centres of production with each meeting the criteria of significant production scale and substantial exploration upside,” Beament said.

The company has also announced a A$60-million exploration budget and a further A$70-million expenditure on expansionary capital for production growth for the current financial year.

Of the additional expansionary capital, A$30-million will be spent on developing the Millennium mine and bringing it into production, A$20-million will go towards progressing the Central Tanami project development and converting to a 60% JV, A$15-million will be spent on expanding gold production capacity at the Kundana JV and A$5-million will go to ancillary projects.