northern-star-bill-beament.png

Bill Beament: Northern Star's Billion Dollar Boss

Issue 102, October 2014

Continued from Page 2 ➤

falling costs per tonne, feeding through into ounces. Beament expects to reapply the formula: figures for the last 3-months are due shortly, but in the June quarter Northern Star mined over 127,000 ounces, before accounting for 75,000 ounces mined at Jundee, putting the company a whopping 40 per cent ahead of guidance and paying down A$20m of debt.

All-in costs meanwhile fell 14 per cent to A$1,032 per ounce, whilst a “high speed development crew” has been deployed at Pegasus, adding 50,000 ounces to production from July 2015 at a capital cost of A$5m.

Depletion

“An 8-year-old can see that if we don’t find more minerals at a far faster rate, the mining industry is going to die,” Beament recently told the Mining Club in Perth. The comment is as true of Northern Star as of the industry as a whole: reserves at Plutonic and Jundee only support 2 years of production and Beament could be criticised for buying rapidly depleting assets.

Newmont and Barrick had stopped investing in the deposits, he says. “It’s very hard in a company of that size to get your project ranked in the top quartile for exploration. If you stop drilling Australian gold assets, the mining front is going to catch up very quickly with the geology bow wave.”

Even if mining outpaces resource replacement, at the current gold price of A$1,422 per ounce (USD$1,240), Northern Star will have paid off its deal costs in less than a year. As at Paulsens however, for a fraction of each mine’s sunk capital, Beament has also acquired cash flow and exploration on some of the highest grade gold zones globally, giving the company huge leverage to gold price upside.

Discovery

Northern Star recently upped its exploration budget threefold to A$50m per annum and has already added 752,000 ounces to resources at Pegasus and Jundee. “I think investors want to see visibility on 4 to 5 years,” Beament says. “That doesn’t necessarily have to be in reserves, it can be confidence in the orebody.”

The prospect of adding new ounces has eased Beament’s appetite for new deals. “We can generate a lot of value by pushing our mine lives out,” he says. “The discovery’s been done, a lot of the geological thinking has already happened. We don’t need to discover new orebodies. It’s there in front of us.” 

“I think investors want to see visibility on 4 to 5 years.”

RELATED NEWS

Northern Star's Lucrative Timezone Arbitrage

Bill Beament continues acquisition binge, buying Newmont's Jundee gold mine in Western Australia

............................................

Plucky Klondex Squeezing Cash from Midas

Klondex halves headcount
and increases tonnage after Newmont deal

............................................

Questioning MAG Silver's Production Guidance

MAG's Juanicipio mine in Mexico heading into production full year ahead of guidance

............................................

............................................

A Gift to Mining Finance: Pierre Lassonde

"Get naked on the freeway and opportunity will come. Be seen and be in the way of opportunity."

Spotlight on
Boardroom Pay:
the ASX

Bathurst & Highlands Pacific:
hefty salaries sit alongside dire company performance