PERTH (miningweekly.com) – Gold miner Saracen Mineral Holdings has struck a binding agreement with North American major Barrick Gold to acquire its 50% interest in the Kalgoorlie Super Pit mine, in Western Australia, for $750-million.

The acquisition would establish Saracen as one of Australia’s largest gold producers, with three mines in close proximity to Kalgoorlie, producing more than 600 000 oz/y, with a combined reserve of more than seven-million ounces underpinning a group mine life of more than ten years.

“We are proud to announce this acquisition, which we believe will be transformational for Saracen and our shareholders. The Super Pit is a Tier 1 Australian gold mine with an outstanding track record of stable, large-scale gold production and cash generation over many decades,” said Saracen MD Raleigh Finlayson.

“It is an asset Saracen knows well and has admired for many years, and we are confident it aligns with our clearly defined growth strategy.”

The Super Pit currently has an estimated reserve of 7.3-million ounces, and has produced an average of 660 000 oz/y at an all-in sustaining cost of about A$1 100/oz over the last five years.

The project is jointly owned and operated by gold major Newmont Goldcorp.

"The sale of our non-operating interest in Kalgoorlie Consolidated Gold Mines (KCGM) represents the first step in our plan to realise in excess of $1.5-billion from the disposal of noncore assets by the end of next year.  While this iconic gold mine has been a valuable contributor to Barrick over the years, the asset does not fit with our strategy of operating mines that we own. The sale allows us to further focus our portfolio on core operations," Barrick president and CEO Mark Bristow said.

He added Barrick was pleased to have achieved a successful outcome following a competitive sale process and was confident that Saracen would be an "excellent partner" at KCGM going forward. 

Proceeds from the sale would be used to further strengthen the balance sheet, invest in the miner's future and support its commitment to deliver returns to shareholders.

CAPITAL RAISE

Saracen on Monday said that it would raise some A$796-million through an underwritten institutional placement and an underwritten 1-for-5.75 pro-rata accelerated non-renounceable entitlement offer, while the balance of the purchase price would be funded from a new A$450-million senior secured term loan.

The institutional placement would comprise 125-million new shares, issued at A$2.95 each to certain eligible institutional investors, while the entitlement offer would consist of a further 144.9-million shares, also priced at A$2.95 each.

The issue price represents a 13% discount to Saracen’s closing price on November 15, and a 10.1% discount to the theoretical ex-rights price.