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Northern Star shares on watch after US$800 million acquisition

Kenneth Hall
gold mining shares

Northern Star Resources Ltd (ASX: NST) shares will be worth watching when they emerge from a trading halt on Wednesday.

The Aussie gold miner announced a US$800 million (A$1,168 million) acquisition as it looks set to become a joint venture partner with Saracen Mineral Holdings Ltd (ASX: SAR).

What did Northern Star announce this morning?

Northern Star has entered into a binding sale agreement with Newmont Goldcorp Australia to acquire in Kalgoorlie Lake View Pty Ltd (KLV).

Through the stakes held by KLV, Northern Star will acquire US$775 million of Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM).

Northern Star will pay US$25 million for KCGM’s associated assets, bringing the total consideration to US$800 million.

The Northern Star share price will be worth watching on Wednesday as investors balance the new resource against the A$480 million debt facility and A$765 million institutional placement.

KCGM is a 50–50 joint venture (JV) between US-based Newmont Goldcorp and Saracen.

The JV’s assets include the Super Pit in Kalgoorlie, Western Australia and the acquisition increases Northern Star’s gold deposits. 

The Saracen share price rocketed higher after announcing its 50% Super Pit acquisition in November. All eyes will be on the Northern Star share price to see if there’s a similar reaction this morning.

Saracen will remain in the JV and Northern Star expects the acquisition to be immediately accretive to the group.

The transaction should complete by early January 2020 with approval required from the Western Australia Minister of Lands. 

Did Northern Star report anything else?

The Northern Star share price should be buoyed by its existing operations update today.

Existing Australian operations are in-line with guidance and produced 158,707 ounces at an all-in sustaining cost (AISC) of A$1,250 per ounce.

The group is forecasting December quarter production of 165,000 to 175,000 ounces while its Pogo transition plan remains on track.

I’d be keeping an eye on the group’s shares when they return to trade on the ASX tomorrow.

The post Northern Star shares on watch after US$800 million acquisition appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019