A PORTRAIT OF SUNK CAPITAL: Northern Star's Jundee mine in Western Australia, bought from Newmont last year for A$82.5m ($77m). Photo: Northern Star Res.

A PORTRAIT OF SUNK CAPITAL: Northern Star's Jundee mine in Western Australia, bought from Newmont last year for A$82.5m ($77m). Photo: Northern Star Res.

Who's Winning? Northern Star Resources

Issue 117, February 2015

Bill Beament appears to be have been the only person to turn up to the biggest gold auction in memory.

In mid-2013, Northern Star Resources looked like a humdrum gold producer in Australia's lower-mid ranks, but beneath its bonnet, former mine contractor Bill Beament was aggressively squeezing cash from its Paulsens mine, whilst kicking-out the mine-life.

In 3 striking deals in 2014, the company swallowed 4 mines and the bonanza grade Pegasus discovery being discarded by Barrick and Newmont. The buying campaign tripled Northern Star's resources to 6.2m ounces, lifted output sixfold to 600,000 ounces and boosted free cash flow to over A$200m per annum, exceeding the total deal cost.

For a fraction of each mine's sunk capital, Beament has acquired cash flow and exploration on some of the highest grade gold belts globally. Upping its exploration budget to a punchy A$50m per annum and with 23 drill rigs turning, Northern Star has already added 300,000 ounces to its Jundee resource and 350,000 to Pegasus, due to enter production mid-year.

This week, Beament also embarked on a second wave of smaller, bolt-on deals, using its newfound milling capacity across Western Australia to mop-up otherwise stranded assets. On Tuesday, it paid A$1.5m for the Hermes gold project, including a 300,000 ounce resource, followed this morning by news that it has bought into the 2.6m ounce Central Tanami project for A$20m.

Beament's background as a contractor has been key to Northern Star's success, giving him a razor-like focus on margins and a more personal understanding of a mine's potential than accountants viewing the deposit from the wrong side of the Pacific.

More simply, he has caught the bottom of the cycle by throwing himself into acquisitions when investors were telling companies to rationalise their portfolios. “We sensed the opportunity,” Beament told Global Mining Observer in October, “took on what we could and it was one of those perfect windows where there wasn’t much competition.”

Originally published in "Who's Winning?", a roundup of companies capitalising on the current down-cycle 

“It was one of those perfect windows.”

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