Diggers and Dealers: 130 years on and Northern Star sees more ahead for Golden Mile; Goldies face music on takeover talk
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Paddy Hannan, Dan Shea and Tom Flanagan stumbled on the golden rocks that would become Kalgoorlie’s golden mile 129 years ago.
Well over a century on and over 30 years since Alan Bond consolidated its diverse leases into the singular and iconic Super Pit, the Golden Mile’s first sole-owner Northern Star Resources (ASX:NST) says many of its best years could be ahead of it.
The Super Pit and Mt Charlotte mines’ production profiles have slipped from ~800,000ozpa before a wall slip a few years ago to ~450,000ozpa, but a major campaign of renewal, including a new multi-million dollar fleet of 39 dump trucks and exploration splurge by its Australian owner promise to revitalise it in years to come.
“Absolutely, there’s growth and multi-decade life that wasn’t in the plan that we acquired,” NST MD Stuart Tonkin said.
“We saw it in the due diligence, our confidence of what we could do with the drilling and the productivities are being delivered.
“And so I absolutely believe (and) it’s hard to say after 100 years of production, you know, the best years are ahead of it.
“It’s awesome to have such a top … global gold mine that you have multiple decades of visibility on.”
Tonkin and NST have found additional value in the Super Pit through exploration where Barrick and Newmont deigned to invest against their global portfolios.
Northern Star has since added years to mines which until not all that long ago were slated to run out of reserves last year.
It now has 27.4Moz of resources, 11.9Moz of reserves, and too many years to conceive ahead of it, supporting a DFS into a $1b plus expansion of its processing plant to 24Mtpa.
“We’ve put the first new portals and drill drives in in 25 years in that north-western Wall and that’s what’s added the Fimiston underground resource so there was no drilling going into that,” Tonkin said.
“We’ve rehabilitated all the bottom levels of Mount Charlotte down to the 32 level and basically have drills in there now extending that down at depth.
“And that’s a deposit that’s mined 5.6 million ounces and it’s been running for 60 years, and it was not being drilled at depth. So below that kilometre, we know that there’s no geological reason that ceases.
“So it’s really about getting the dual platforms and in getting the information to flow.”
While NST has been successful in defining resources previously ignored by its former North American owners, Tonkin denies they had a failure of imagination when it came to the potential of the Super Pit and adjacent Mt Charlotte mine.
“It’s not a failing of the previous owners and I will reinforce that you always have choices across your investments,” he said.
“And so it is about where that capital is applied, you know it might be in a different asset, different country, different life of the cycle that it’s in. And it’s in ranking, so just because you have something better doesn’t mean that this is bad.
“So no different to some of the other mines we’ve acquired in our journey, at that time, they weren’t the best asset in that portfolio. But when we’re able to get it and renovate it, minds like Pogo in Alaska, Jundee, you can really with the investment phase bring them back to life.”
So is there anything that doesn’t fit in the portfolio of Australia’s second largest gold miner?
Some market watchers think NST could do away with its 240,000ozpa Carosue Dam mine, part of the 2021 merger with Super Pit JV partner Saracen, while NST just put its Jubilee Mill on care and maintenance.
Tonkin is in no rush to sell anything despite recent moves like the $400m trade of the Kundana mines to Evolution Mining (ASX:EVN), and the sale of the Paulsens and Coyote assets for $44.5m to Black Cat Syndicate (ASX:BC8).
“You’ve seen us divest things along the way on the journey so that’s in our active portfolio management strategy,” he said.
“We’ve just sold the Paulsen’s and Western Tanami (Coyote) assets. And when you look across all of our mines, there are high cost mines, they still generate cash, they still feed the projects that we’re growing.
“In points in time, we will continually actively manage and renew that. But you know at the moment Australia our guidance is put out there to deliver this year and that’s one of the assets we hold in our own production today.”
Carosue remains part of Northern Star’s current plans, including its forecast to hit 2Mozpa (up from 1.6Moz) by 2026.
Meanwhile, the Jubilee Mill at South Kalgoorlie could be held for a while to come given Northern Star’s ownership of the mines on its leases.
“You’ve seen us hold a Paulsen’s, for example, for many years on care and maintenance without doing a sale,” Tonkin said. “So you know we’re not in a rush to drop an asset like that.”
Two M&A stories have dominated the first two days of Diggers and Dealers — Raleigh Finlayson’s attempt a la Superstar Billy Graham to bearhug St Barbara (ASX:SBM) into a merger with Genesis Minerals (ASX:GMD) and Gold Road Resources’ (ASX:GOR)recently acquired stake in De Grey Mining (ASX:DEG).
Both St Barbara and Gold Road presented today, neither providing any further illumination on whether deals could be incoming.
Gold Road has been an active corporate fixture in recent times, buying DEG shareholder DGO and failing in an effort to secure junior Apollo Consolidated in a bidding war against Ramelius Resources last year.
MD Duncan Gibbs admitted the company, which owns half of the 340,000ozpa Gruyere gold mine with South Africa’s Gold Fields, is keen on an advanced exploration asset.
“We’re happy to play in kind of any of the space so we’re certainly able to look at projects in that advanced exploration, development (phase),” he said.
“You know, first prize is probably an operating asset, but everybody else is looking for those and you know, it’s generally hard to see value.”
Gibbs said he “can’t really talk about corporate activity” but was seen talking intently to Genesis owner Raleigh Finlayson today. Notably, GOR owns 6.1% of GMD target Dacian Gold (ASX:DCN).
“It’s a good potential segue to use that mill as the fundamental asset. So to me, it makes sense. Obviously, we’ll have to decide whether when or whatever we do with our shareholder position.”
St Barbs, meanwhile, is mulling the sale of its Simberi mine in PNG and facing questions about the Genesis merger talks.
CFO Lucas Welsh today told journalists on the sidelines of the conference he could not say anything specifically about the Genesis discussions.
“I think I will say Craig (Jetson) our CEO he’s quite supportive of consolidation in the region,” he said.
“Not just Genesis, there’ll be other companies and other opportunities we’re talking to, so there’s nothing really to update on that.”