Northern Star has agreed to acquire the 4.1 million ounce (4.1Moz) Pogo underground gold mine in Alaska, US in a deal worth $260m.
Image: Northern Star seeks to acquire underground gold mine. Photo: Photo by rawpixel on Unsplash.
The gold mine will be acquired by the Australian gold producer from Sumitomo Metal Mining, which owns 85% interest, and Sumitomo Corporation, which holds the remaining 15% stake.
Located 145km south-east of the city of Fairbanks in Alaska, the Pogo Gold Mine commenced production in 2006. The ore is processed through a 1mtpa capacity plant.
The acquisition is in line with Northern Star’s key criteria of maximising financial returns by owning and investing in Tier-1 projects in Tier-1 jurisdictions.
Northern Star executive chairman Bill Beament said: “All the metrics of this acquisition are enviable. The price, at US$63 per ounce, creates an opportunity to generate substantial value.
“We will also invest in growing the resources and reserves, as we have done at our Tier-1 projects in Western Australia, with a particular focus on upgrading it to JORC-2012 status.”
“Pogo is also an absolutely perfect project for Northern Star to apply its highly-successful recipe of investment in extensive exploration and development, which in turn drives increases in resources and reserves, mine life, production and free cashflow.”
Over the past 12 years, the mine has produced 3.8Moz of gold at an average mine grade of 13.6 grams per ton (g/t). Average production rate stands at 300,000 ounces per year (oz/y).
Beament added: “Pogo presents Northern Star with the same opportunity we encountered at Jundee four years ago.
“By investing in exploration and development, we are confident we can grow the resource, production and mine life for the benefit of the mine’s employees, contractors, the local community and our Shareholders.”
Scheduled to be completed by October 2018, the deal is subject to obtaining necessary approvals and satisfaction of other customary conditions.
Upon completion of the deal, Northern Star plan to continue operations with existing staff and contractors complemented by Northern Star integration team at the mine.
The firm also intends to invest in targeted intensive drilling programs to extend mine life, and develop opportunities to increase productivities and efficiencies.