Northern Star raises funds to buy gold mine in Alaska
In detail, Northern Star was able to raise almost $1.3 million to help fund the acquisition of the operation, 85 per cent of which is currently controlled by Sumitomo Metal Mining and 15 per cent by Sumitomo Corporation. Total price tag is $260 million, which means that the remaining balance will be funded from Northern Star’s existing cash reserves. The deal is expected to go through in October.
“Existing shareholders, fund managers and analysts from around the world have said they share our view that Pogo is an exceptional acquisition which meets our criteria of owning Tier One assets with strong growth potential in Tier One locations,” Northern Star Executive Chairman, Bill Beament, said in a media statement.
Pogo would be the Subiaco-based firm’s first asset outside Australia. Located in the upper Goodpaster River Valley, about 38 miles northeast of Delta Junction in southeastern Alaska, the mine has been commercially active since 2006 and has produced over 3 million ounces of gold to date.
Despite the fact that current mine life is expected to extend just through 2020, with reserves estimated in 4.1 million ounces, Northern Star plans to start an exploration campaign that would grow the resource, production and mine life.
In documents related to the acquisition, the Australian company mentions engaging in near-mine exploration given that this, the eight largest gold mine in the U.S., is considered a highly-prospective tenement package.
“A significant amount of mineralisation is present outside of the current Pogo resources, there is also considerable mineralisation inside the current resources that hasn’t made it into reserves,” the briefs read.
To run such discovery program, Northern Star says it plans to draw from the expertise of Pogo’s current management team while making use of company experts’ own knowledge of underground mining and exploration.