South Kalgoorlie gold mine sold to Northern Star for $62.6 million

Northern Star Resources (ASX: NST) announced today that it has agreed to pay Westgold Resources (ASX: WGX) $62.6 million for the South Kalgoorlie mine, located about 50 kilometres from its Kundana operations in Western Australia.

In a press release, Northern Star explained that the acquisition comprises the project’s operating processing facility, which has an annual throughput capacity of 1.2 million tonnes, a JORC resource of 4Moz, including 250,000oz in reserves, and 800 square kilometres of Prospective Gold tenure.

South Kalgoorlie is said to be currently producing at the rate of 30,000 – 40,000 ozpa.

"Our highly successful exploration strategy in Kalgoorlie has generated huge growth in our inventory and paved the way for us to grow production there to 300,000 ounces per annum," Northern Star executive chairman, Bill Beament, said in the brief.

Beament added that the purchase will help his firm achieve its organic growth target “in a more timely and economical fashion” and at the same time, it will provide the company with significant exploration potential, including a resource inventory.

Under the terms of the agreement, the Subiaco-based miner will pay Westgold A$80 million (USD$62.6 million) comprising 9.5 million Northern Star shares at a ten-day VWAP of A$6.30 per share, representing a total of A$60 million in NST shares and A$20 million in cash.