Northern Star Resources Ltd · ASX:NST
Northern Star Resources — Investor Presentation (December 2019)
74 slides from Northern Star Resources's investor presentation, Dec 17, 2019
Slide 1: An Australian gold miner – for global investors
An Australian gold miner – for global investors Acquisition of Newmont Goldcorp’s 50% interest in KCGM and Equity Capital Raising
Slide 2: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing Not for release to US wire services or distribution in the United States. This presentation is issued by Northern Star Resources Limited (“Company” or “Northern Star” or “NST”). Pursuant to ASX Listing Rule 15.5, Northern Star confi
Slide 3: Disclaimer
Disclaimer Ore reserves and mineral resources reporting of Northern Star This presentation contains estimates of Northern Star's ore reserves and mineral resources, as well as statements about KCGM's mineral resources and mineral reserves. The information in this presentation that relates to the ore
Slide 4: Disclaimer
Disclaimer Industry data Certain market and industry data used in connection with or referenced in this presentation, including in relation to other companies in Northern Star's peer group, may have been obtained from public filings, research, surveys or studies made or conducted by third parties, i
Slide 5: Disclaimer
Disclaimer Investment risk As noted above, an investment in shares in Northern Star (including New Shares) is subject to investment and other known and unknown risks, some of which are beyond the control of Northern Star. Northern Star does not guarantee any particular rate of return or the performa
Slide 6: Table of Contents
Table of Contents 1. Transaction Summary 7 2. KCGM Overview 18 3. NST Operations Update 26 4. Investment Highlights and Transaction Rationale 29 5. Equity Capital Raising and Transaction Funding 39 Appendix A. Summary Transaction Terms 45 JORC Mineral Resources and Ore Reserves and B. 47 KCGM Foreig
Slide 7: 1. Transaction Summary
> . NORTHERN STAR 1. Transaction Summary
Slide 8: Transaction summary
Transaction summary Northern Star to acquire Newmont’s 50% interest in Kalgoorlie Super Pit and additional associated assets ▪ Northern Star to acquire from Newmont Goldcorp Australia, a subsidiary of Newmont Goldcorp Corporation (“Newmont”), all the shares in Kalgoorlie Lake View Pty Ltd (“KLV"), w
Slide 9: Transaction summary (cont.)
Transaction summary (cont.) Northern Star to acquire Newmont’s 50% interest in Kalgoorlie Super Pit and additional associated assets ▪ The acquisition will be immediately accretive to Northern Star on an EV/Reserve, EV/Resource, P/NAV basis and earnings per share accretive in its first full financia
Slide 10: Transaction funding
Transaction funding Acquisition to be funded through a combination of new debt and new equity ▪ Equity raising comprises: Transaction sources of funds A$M − A fully underwritten A$765 million institutional Secured debt facilities 480 placement at an issue price of A$9.00 per share; Underwritten Inst
Slide 11: Benefits of the Transaction to NST Shareholders
Benefits of the Transaction to NST Shareholders ▪ Accretive to NST’s earnings in FY211, Reserves, Resources, Production and NAV per share 1 Accretive on key metrics ▪ Immediately delivers earnings growth, extends mine life and grows free cash flow ▪ Total camp scale endowment of ~80Moz 2 World class
Slide 12: Consistent with strategy: Tier-1 assets, Tier-1 locations
Consistent with strategy: Tier-1 assets, Tier-1 locations ▪ Globally there are 50 deposits that produce over 300kozpa. Of these, only 19 are in Tier-1 mining jurisdictions (Australia, USA and Canada) - Production is declining in these regions due to a lack of discoveries and significant reserve depl
Slide 13: KCGM acquisition - Consistent with NST's Strategy
KCGM acquisition - Consistent with NST’s 5 Year Strategy 5 Year Vision A global mid-cap and ASX100 sustainable gold producer focused on superior shareholder value creation Establish concentrated centres to maximise Develop functional disciplines and corporate Find new concentrated centres through pr
Slide 14: Immediately accretive to NST
Immediately accretive to NST Strongly accretive to NST on a range of key metrics EV / Reserve (A$/oz)1 EV / Resource (A$/oz)1 NST FY21E earnings per share2 Lower acquisition Lower acquisition multiple = accretion +16% multiple = accretion for NST Shareholders for NST Shareholders 1,009 278 194 310 N
Slide 15: KCGM has a history of strong margin delivery
KCGM has a history of strong margin delivery Cost profile has allowed KCGM to generate significant margins across a range of gold price environments and for many decades; cumulative estimated pre-tax margin of ~A$850M (50%) in the 4 years to 2018 alone. In recent years KCGM AISC has typically includ
Slide 16: The World Class Golden Mile and Mt Charlotte Systems
The World Class Golden Mile and Mt Charlotte Systems MT CHARLOTTE GOLDEN MILE (Fimiston) Years of Operation: 1963 – Present Years of Operation: 1893 – Present Production / Oz 48.2Mt @ 3.65g/t Mined Production / Oz Produced 414.2Mt @ 4.96g/t Mined Produced (1963- Oct 2019) 5.5Moz Produced (1893- Oct
Slide 17: Management Structure set to Maximise Value Creation
Management Structure set to Maximise Value Creation ▪ Northern Star’s proven value creation and integration team will be dedicated to KCGM; This will not detract Northern 100% 100% Saracen from the positive transition plan well underway at Star Northern Star’s Pogo operation 100% Owned ▪ Post announ
Slide 18: 2. KCGM Overview
> . NORTHERN STAR 2. KCGM Overview
Slide 19: KCGM – a world class gold asset and geological system
KCGM – a world class gold asset and geological system ▪ Approximately 600km east of Perth, Western Location Australia ▪ Northern Star and Saracen to engage post acquisition to explore the optimal operatorship Operatorship model, with a view to capitalising on each partner’s respective and complement
Slide 20: Consistent operating performance
Consistent operating performance Tier-1 asset with an outstanding operational history KCGM Gold production and NEM recent guidance (100%, koz, LHS) and AISC (US$/oz, RHS) 1,000 1,131 1,200 1,030 1,035 900 1,009 965 1,000 800 764 734 813 700 664 658 770 632 717 800 600 636 570 540 500 600 400 400 300
Slide 21: One of Australia's largest, most iconic gold operations
One of Australia’s largest, most iconic gold operations Large scale production with considerable resource endowment to underpin long life mining Gold production in the 12 months to 30 June 2019 (koz) Total Gold Resources1 (Moz) 913 18.6 689 11.7 525 518 502 484 452 365 363 7.7 335 7.0 6.7 295 6.5 6.
Slide 22: Resource and Reserve growth
Resource and Reserve growth Strong history of replenishing reserves and resources TOP 5 KCGM GROWTH PROJECTS KCGM reserve and resource ▪ Mineralisation not extracted by previous underground mining. 2014 – 2018 year end estimates (50%)1,2,3 FIMISTON This includes parallel structures, high grade pilla
Slide 23: Fimiston Underground Potential
Fimiston Underground Potential Fimiston Plan View Fimiston Cross Section C-D ▪ Total production on the Golden Mile for past F C D 125 years has totalled ~62Moz ▪ The majority of historic workings on the Western Lodes discontinue between 1,000m and 1,200m below surface. A B The deepest workings are ~
Slide 24: Improved pit wall modelling
Improved pit wall modelling A significant amount of geotechnical investigation and numerical modelling to quantify overall slope stability has improved the planning and design of future pit wall cutbacks Summary of investigations Impact on life of mine plan ▪ Following the pit wall slippages that oc
Slide 25: Environmental and Social Responsibility (ESR)
Environmental and Social Responsibility (ESR) Strategic opportunity to learn and grow from Newmont’s world leading ESR practices Strong ESR track record at KCGM Northern Star’s ESR practices ▪ KCGM has consistently been operated to global best Social & Safety Environmental practice ESR standards We
Slide 26: 3. NST Operations Update
\) . NORTHERN STAR 3. NST Operations Update
Slide 27: Pogo – Inflection point reached; December month on track
Pogo – Inflection point reached; December month on track for 20-25koz produced Pogo Tonnes mined by category Jan-Nov 2019 + December forecast ▪ As per previous announcements, Pogo’s 18 month 120,000 12 transition plan is on track with the December quarter 100,000 10 Average Grade (g/t) Tonnes Mined
Slide 28: Australian Operations performing within Guidance
Australian Operations performing within Guidance ▪ Group production maintained at 800,000-900,000oz at an AISC A$1,200-A$1,300/oz (pre KCGM Transaction) ▪ In the September quarter, Australian Operations produced 158.7koz at AISC of A$1,250/oz; December quarter is forecast to be stronger at 165koz to
Slide 29: 4. Investment Highlights and Transaction Rationale
4. Investment Highlights and Transaction Rationale
Slide 30: KCGM provides another opportunity for NST to apply its proven acquisition and operating model
KCGM provides another opportunity for NST to apply its proven acquisition and operating model to deliver value creation for Shareholders Initiative Description ▪ Maximise operational cashflow to recover acquisition purchase price and strengthen balance sheet for future growth Pay-off Acquisition ▪ D
Slide 31: Tier-1 asset in a Tier-1 jurisdiction
Tier-1 asset in a Tier-1 jurisdiction KCGM is an iconic and low risk asset in Kalgoorlie, a key pillar of Northern Star’s business ▪ Leverages Northern Star’s strong operating experience High quality in Kalgoorlie-Boulder, a concentrated mining centre jurisdiction with excellent infrastructure Low o
Slide 32: Attractive asset for NST's portfolio
Attractive asset for NST’s portfolio Extends portfolio mine life, adding meaningful production beyond 2030 1. Kalgoorlie Operations (100%) KCGM to be Mine type: U/G incorporated into Australia US Processing: CIL / CIP plant with broader Kalgoorlie (Alaska) throughput of 3.2Mtpa operations FY20G prod
Slide 33: Attractive asset for NST's portfolio
Attractive asset for NST’s portfolio Creation of a 1Moz+ gold producer FY20G Production1 (koz) • KCGM H2FY20 Guidance (50%): 1,250 • 120koz – 140koz 1,110 FY20PF (assuming • A$1,450/oz – A$1,550/oz AISC 1,000 12 months KCGM) FY20 750 • Revised FY20 NST consolidated guidance of: 850 980 (6 months KCG
Slide 34: Elevates NST's global significance
Elevates NST’s global significance Growing to over 1Mozpa gold production with a globally competitive cost position operating exclusively in Tier-1 jurisdictions Australian peers1 (FY20 guidance) Global Mid-Tier Peers1 (CY19 guidance) CY19 production guidance (koz, LHS) NST PF assumes FY20 productio
Slide 35: Elevates NST's global significance
Elevates NST’s global significance Sector leading portfolio of high class Reserves and Resources exclusively in Tier-1 jurisdictions Australian peers1 Global Mid-Tier Peers1 Reserves (Moz, LHS)) Resources (Exclusive, Moz, LHS) Reserve life (yrs, RHS)) Lowest ranking jurisdiction in 2018 Fraser Reser
Slide 36: Other associated assets as part of the Transaction
Other associated assets as part of the Transaction Additional assets purchased with this Transaction beyond the 50% interest in KCGM include: ▪ Separate parcel of nearby Kalgoorlie tenements (continuous along strike from NST tenements), 100 per cent owned by Newmont ▪ 6-month transitional services a
Slide 37: Consolidates NST's footprint in Kalgoorlie
Consolidates NST’s footprint in Kalgoorlie NST has accumulated a premier land holding in the world class Kalgoorlie Camp NST Managed Regional exposure Tenure KCGM Tenure ▪ Northern Star has accumulated unprecedented exposure to the world-class (50% to be acquired) Newmont Tenure (100% to be acquired
Slide 38: Newmont Power Business
Newmont Power Business The purchase price includes a US$25 million conditionally refundable option fee for the acquisition of Newmont’s power business (Newmont Power) Overview of Newmont Power (wholly-owned subsidiaries) Terms of option arrangement ▪ Northern Star has been granted an exclusive optio
Slide 39: 5. Equity Capital Raising and Transaction Funding
5. Equity Capital Raising and Transaction Funding
Slide 40: Equity capital raising
Equity capital raising Equity component to be funded via an Institutional Placement, Share Purchase Plan and Director Placement1 ▪ Fully underwritten Placement to professional and sophisticated investors to raise A$765 million (“Placement”) − 85 million new shares to be issued, representing 13% of N
Slide 41: Capital structure and sources and uses
Capital structure and sources and uses Pro-forma Balance Sheet NST standalone Acquisition adjustment Pro Forma Northern Star Cash and bullion1,3 A$M 146 (5) 141 Borrowings2,3 A$M 136 480 616 Net Debt (Cash) A$M (10) 485 475 Shares Outstanding4 #m 648.9 85.0 733.9 Share price / Offer Price5 A$ 9.65 9
Slide 42: Placement and SPP timetable
Placement and SPP timetable Event Date Announcement of placement Tuesday 17 December 2019 Announcement of completion of Placement and trading halt lifted Wednesday 18 December 2019 Settlement of New Shares issued under the Placement Friday 20 December 2019 Allotment and trading of New Shares issued
Slide 43: Strong balance sheet maintained
Strong balance sheet maintained Drawdown of A$480M of incremental debt has a negligible impact on gearing relative to peers Market capitalisation and Enterprise Value (A$M) Gearing (Net Debt / Enterprise Value1) 22,139 Net Cash 23% 25% 21% 14,385 Net Debt 12,583 17% Market Cap 15% 10,047 11% 9,275 8
Slide 44: Prudent financial and risk management
Prudent financial and risk management Term-loan amortisation profile ▪ Continued strong support from Northern Star’s banking group 200 ▪ New 4-year secured debt facility of A$400 million to be fully 150 drawn and revolver facilities utilised to partially fund Transaction. Revolver facility also anti
Slide 45: Appendix A: Summary Transaction Terms
Appendix A: Summary Transaction Terms
Slide 46: Summary Transaction terms
Summary Transaction terms Northern Star to acquire all the shares in Kalgoorlie Lake View Pty Ltd, which holds a 50% interest in Kalgoorlie Consolidated Transaction Gold Mines Pty Ltd (“KCGM”), and associated assets from Newmont Goldcorp Australia Pty Ltd Seller Newmont Goldcorp Australia Pty Ltd Bu
Slide 47: Appendix B: JORC Mineral Resources and Ore Reserves and KCGM Foreign Estimates
Appendix B: JORC Mineral Resources and Ore Reserves and KCGM Foreign Estimates
Slide 48: KCGM Resources and Reserves (50%)
KCGM Resources and Reserves (50%) KCGM NI 43-101 MINERAL RESOURCES 1,2,3 As at 31 December 2018 MEASURED INDICATED INFERRED TOTAL RESOURCES EXCLUSIVE OF RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces (000's) (gpt) (000's) (000's) (gpt) (000's) (000's) (gpt) (
Slide 49: Northern Star Mineral Resources
Northern Star Mineral Resources NORTHERN STAR MINERAL RESOURCES1 AS AT 30 JUNE 2019 MEASURED INDICATED INFERRED TOTAL RESOURCES NST ATTRIBUTABLE INCLUSIVE OF RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces (000's) (gpt) (000's) (000's) (gpt) (000's) (000's) (g
Slide 50: Northern Star Mineral Resources
Northern Star Mineral Resources NORTHERN STAR MINERAL RESOURCES (Continued)1,2 AS AT 30 JUNE 2019 MEASURED INDICATED INFERRED TOTAL RESOURCES NST ATTRIBUTABLE INCLUSIVE OF RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces (000's) (gpt) (000's) (000's) (gpt) (000
Slide 51: Northern Star Ore Reserves
Northern Star Ore Reserves NORTHERN STAR ORE RESERVES1 AS AT 30 JUNE 2019 PROVED PROBABLE TOTAL RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces NST ATTRIBUTABLE RESERVE (000's) (gpt) (000's) (000's) (gpt) (000's) (000's) (gpt) (000's) JUNDEE GOLD PROJECT Surface 303 1.1 11 2,212
Slide 52: Northern Star Ore Reserves
Northern Star Ore Reserves NORTHERN STAR ORE RESERVES1 (Continued) AS AT 30 JUNE 2019 PROVED PROBABLE TOTAL RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces NST ATTRIBUTABLE RESERVE (000's) (gpt) (000's) (000's) (gpt) (000's) (000's) (gpt) (000's) POGO PROJECT Surface - - - - - -
Slide 53: Appendix C: Key Risks
Appendix C: Key Risks
Slide 54: Key risks
Key risks ▪ There are various risks associated with an investment in New Shares or Northern Star generally, as with any securities market investment. This section summarises the following key risks: ▪ Existing business and operational risks for Northern Star - these risks are generally common to gol
Slide 55: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Mineral Northern Star's JORC Code-compliant Mineral Resources and Ore Reserves for its existing projects are expressions of judgement based on industry practice, Resources and experience and knowledge and are estimates only. Estimates of Minera
Slide 56: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Production and The ability of Northern Star to achieve its production expectations or meet operating and capital expenditure estimates on a timely basis cannot be assured. The cost estimates operations and assets of Northern Star, as with any o
Slide 57: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Foreign Northern Star is an Australian business that reports in Australian dollars. Northern Star's revenue is derived from the sale of gold in US dollars. However, costs are exchange rate mainly incurred by the businesses in Australian dollars
Slide 58: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Environmental Mining and exploration can be potentially environmentally hazardous, giving rise to potentially substantial costs for environmental rehabilitation, damage control and risks losses. Northern Star is subject to environmental laws an
Slide 59: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Water sources The effects of changes in rainfall patterns, water shortages and changing storm patterns and intensities may adversely impact the costs, production levels and financial performance of Northern Star’s operations. There is no guaran
Slide 60: Existing business & operational risks for Northern Star
Existing business & operational risks for Northern Star Occupational Workplace accidents may occur for various reasons, including as a result of non‐compliance with safety rules and regulations. Northern Star may be liable for Health and personnel injuries or fatalities that occur to Northern Star's
Slide 61: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition Integration risks An important factor which may impact the long-term success of Northern Star is likely to be the successful financial, cultural and operational integration of Newmont's KCGM Interest into Northern Star. Whilst Northern Star intends to imple
Slide 62: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition Completion / There is no certainty that Northern Star’s acquisition of Newmont's KCGM interest will ultimately complete. Completion of the Proposed Acquisition is subject to a overfunding risk condition precedent and the parties to the share sale deed ("Sha
Slide 63: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition KCGM mineral The mineral resources and mineral reserves estimates for the KCGM Operations, including the Super Pit, have been prepared by KCGM using the Canadian NI 43- resources and 101 Standards and are foreign estimates for the purposes of the ASX Listin
Slide 64: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition Joint venture Upon completion of the Proposed Acquisition, KCGM will be a 50:50 joint venture between Northern Star and Saracen. The KCGM joint venture is structured such management risks that its composition can and may change in the future if one of the j
Slide 65: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition Specific risks In addition to ordinary geological and geotechnical risks to which Northern Star is already exposed (as discussed above), the historical workings associated with, associated with and the planned depth and steepness of the pit walls at, the KC
Slide 66: Risks specific to the Proposed Acquisition
Risks specific to the Proposed Acquisition Foreign currency The purchase price for the Proposed Acquisition (US$775 million), as well as the Option Fee described below and elsewhere in this presentation (US$25 million) is risk payable in USD, and is now set following entry into the Share Sale Deed (
Slide 67: Offer and share investment risks
Offer and share investment risks Underwriting risk Northern Star has entered into an placement underwriting agreement with the Joint Lead Managers (“Underwriting Agreement”) under which the Joint Lead Managers have agreed to fully underwrite the Placement, subject to the terms and conditions of the
Slide 68: Appendix D: International Offer Restrictions
Appendix D: International Offer Restrictions
Slide 69: International Offer restrictions
International Offer restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares of the Company ("New Shares") in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares m
Slide 70: International Offer restrictions
International Offer restrictions Statutory rights of action for damages and rescission Securities legislation in certain of the Provinces may provide purchasers with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, when an offering memorandum that i
Slide 71: International Offer restrictions
International Offer restrictions European Union (France, Germany and the Netherlands) This document has not been, and will not be, registered with or approved by any securities regulator in France, Germany or the Netherlands. Accordingly, this document may not be made available, nor may the New Shar
Slide 72: International Offer restrictions
International Offer restrictions Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to constitute an offer to the public in Norway within the
Slide 73: International Offer restrictions
International Offer restrictions United Arab Emirates Neither this document nor the New Shares have been approved or passed on in any way by the Emirates Securities and Commodities Authority ("ESCA") or any other governmental authority in the United Arab Emirates. The Company has not received author
Slide 74: Northern Star Resources Limited
Northern Star Resources Limited ASX Code: NST An Australian mid cap gold miner – for global investors Investor Enquiries: Luke Gleeson, Investor Relations Level 1, 388 Hay Street, Subiaco 6008 Western Australia T: +61 8 6188 2100 E: info@nsrltd.com W: www.nsrltd.com Inventum 3D Page Links click here
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