PERTH (miningweekly.com) – Gold miner Northern Star Resources is gearing up to become the second largest gold miner on the ASX, with the $91-million acquisition of the Jundee gold mine from Newmont Mining.

The Northern Star offer for the Western Australian mine would comprise a cash component of about $77-million at the closing of the transaction, and a further payment of about $14-million for working capital.

This is Northern Star’s third major acquisition in the last six months. The company has paid A$25-million to buy the Plutonic gold operation from Barrick Gold and A$75-million to acquire the Kundana and Kanowna Belle gold mines, also from Barrick Gold.

New York-listed Newmont said that the divestment of Jundee demonstrated the company’s continued efforts to optimise its portfolio and increase shareholder value by focusing on lower-cost, longer-life operations.

Northern Star, meanwhile, reported that the acquisition would increase the company’s gold production to 550 000 oz/y, from 350 000 oz/y currently, at an all-in sustaining cost of around A$1 050/oz.

MD Bill Beament said that the Jundee operation would immediately increase the company’s free cash flow and had significant potential to increase reserves and resources through exploration at, and around, the mine.

“Jundee is a tier-one asset in the Australian gold mining industry by any measure. It has a highly enviable record, whether it be exploration success, production or cash flow.”

The Jundee gold mine is located about 520 km north of Kalgoorlie, and has been in production since 1995. While openpit operations have ceased, mining continues from underground operations.

The gold mine, which has a processing plant capacity of 1.7-million tonnes a year, produced 279 000 oz in 2013 and was expected to produce more than 200 000 oz/y of gold over the next two years.

Meanwhile, Northern Star had also received a credit approved commitment letter from Investec Bank for an increased revolving facility of A$100-million. The debt facility would be available for general corporate purposes, including funding the Jundee acquisition.

The Jundee acquisition would likely be completed by early July.

Once completed, Northern Star would look to optimise the current mine plan at Jundee, would work at extending the mine life with a targeted and rapid drilling proramme, and would conduct a corporate review of synergies within its existing operations.