Miner gets bang for buck with new finds
Northern Star Resources yesterday revealed a $20 million exploration spend at its Kalgoorlie operations had unearthed a new discovery called Golden Eye which could dramatically extend the lives of the Kanowna Belle and Kundana mines.
The positive drilling results covered as many as six development projects as managing director Bill Beament revealed the one-time acquisition king, Northern Star, now considers assets too pricey as gold regains its lustre.
It comes after Northern Star was recently outbid for La Mancha Resources' Australian assets by Evolution Mining in a scrip deal worth about $415 million.
Mr Beament said the company's Kalgoorlie operations were generating margins of between $500 and $600 an ounce so exploration was the most cost-effective means of creating value.
"In most cases, the market for Australian gold assets has reached elevated levels," he said.
"We have always said we are not in the business of growth for growth's sake.
"We are in the business of generating superior shareholder returns. Paying some of the premiums being asked for gold assets in today's market is not consistent with that objective."
Yesterday's exploration results pushed shares in Australia's second-biggest ASX-listed gold miner, valued at $1.26 billion yesterday, 1.5 cents higher to $2.14 at yesterday's close.
Northern Star's stock has tripled since it acquired Barrick Gold's Kanowna Belle and Kundana assets for $75 million in January 2014.
At the time, the outlook for the ageing Kanowna Belle mine was not rosy with barely two years of reserves.
But yesterday's announcement has breathed new life into the old girl, now in her 22nd year of operations, with work to begin on an exploration drill drive in June to target the Velvet discovery.
Velvet is only 550m laterally from existing underground workings and a new hit of 45.3m at 5.6g/t has pushed it up the priority list.
Close-range drilling is planned for the second half of 2015.
The Golden Eye discovery, only 5.7km from the Kanowna Belle mill, is still in its early days but has Northern Star excited enough to sink more money into the ground in the June quarter.
Northern Star was drilling yesterday at the White Feather discovery, announced in December, where it is trying to justify development of an underground exploration platform.
The original White Feather deposit, discovered in the late 1800s, sparked a gold rush to what is now the ghost town of Kanowna.
At the Kundana operations, Northern Star is dewatering the historic Centenary mine to chase the Millennium discovery with a maiden resource due mid-year.
Northern Star said the Christmas discovery, 600m north-east of the 1.3Moz Raleigh mine, could have "profound implications" for exploration at the Kundana camp if it could prove it is a fault offset of the main Raleigh vein.
Mr Beament said the results showed the Kalgoorlie operations had a "long and lucrative future".
"The speed with which we are building this Kalgoorlie inventory is also extraordinary," he said.
