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Bill Beament: Northern Star's Billion Dollar Boss

Issue 102, October 2014

Northern Star Resources has swept the board in the last
12 months.

A year ago it was the little-known operator of the Paulsens underground gold mine in Western Australia, churning out 88,000 ounces in 2013. A year later, it has upped production sixfold and proved itself the sharpest gold mine operator globally.

The company’s breakneck growth is linked to a single policy, says managing director Bill Beament: its pay structure for underground miners. 

Paulsens Precedent

Beament left mining school in 2000 and joined an underground mine contractor, before starting his own 8 years later, aged 32. The business didn’t fly, but Beament landed as managing director of shell company Northern Star, valued at under A$1m.

After failed bids for a number of mines it bought Paulsens in Western Australia in 2010. The mine was 8 months and 51,000 ounces away from final depletion, whilst the purchase price jumped from A$27m to A$40m before the deal closed.

Beament turned operations around: in its first year under Northern Star, Paulsens produced over 80,000 ounces, whilst costs fell 13 per cent. The deal cost was paid off in 7 months, drilling kicked out the resource base to 4 years of production and Paulsens has since yielded over 400,000 ounces.

Dividends

Cash burgeoned and in mid-2012, the company paid its first dividend. “Low costs pay dividends,” became the company’s slogan. “We sat on the sidelines, made sure we had a great balance sheet and the team in place and were ready to pounce,” Beament says.

As gold prices tumbled last year, gold majors Barrick and Newmont, under balance sheet strain and pressure from investors, looked inward to their operations in Nevada, shedding their Australian mines.

Northern Star began a buying spree, paying A$25m from cash reserves for Barrick’s Plutonic mine. Then in January it closed a A$100m equity raising, heavily oversubscribed, funding the A$75m acquisition of three other Barrick mines, plus the adjacent Pegasus discovery. Finally in May, it paid A$93m for Newmont’s Jundee mine, from cash and a debt facility.

Continue ➤

“We sat on the sidelines and were ready to pounce.”

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