Two precious metal producers plan to combine their operations to become one of the world’s biggest and safest resources companies.
Northern Star Resources and Saracen Mineral Holdings will merge their operations to create the world’s sixth largest gold producer.
Both company boards unanimously approved a binding merger implementation deed to create the enlarged Northern Star Resources with a market capitalisation of $16 billion.
If approved by shareholders and the Supreme Court of Western Australia the new business would employ 3132 workers, from which nearly 21 per cent are female, and produce more than 1.6 million ounces each year. There is potential to expand production volumes to 2 million ounces during the 2027 financial year.
Northern Star took the opportunity to reflect on the recent death of driver Michael Johnson whose loader fell over a stope at Saracen’s Carosue Dam Gold Mine, 123km northeast of Kalgoorlie. The company hopes the merger will reduce the frequency of workplace fatalities.
“I respectfully acknowledge the tragic passing of Michael Johnson who was fatally injured at the Carosue Dam Mine on 13 July 2020,” Northern Star chair Tony Kiernan said in a public statement.
“I again extend our sincere condolences to all of Michael’s family, friends and workmates. An investigation is continuing into the circumstances surrounding the tragedy, with the full support of both Saracen and the underground mining contractor Byrnecut. Safety is at the heart of what we do at Saracen and there is and will be no compromise in this area.”
Northern Star executive chair Bill Beament, Northern Star chief executive Stuart Tonkin, Saracen managing director Raleigh Finlayson and Saracen chief financial officer Morgan Ball will each retain their existing job titles in the merged company.
Beament will eventually become a non-executive chair in July 2021, and Saracen non-executive chair Tony Kiernan will become the lead independent non-executive director in the new company. The new board will comprise of five directors from Northern Star and four directors from Saracen.
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Sternship Advisers and Macquarie Capital are consulting on financial aspects of the deal, while Ashurst Australia and DLA Piper are advising on legal matters.
The merger still needs to be approved by shareholders and is expected to be final in February 2021.