The deal comes as gold has proven one of this year’s best-performing commodities, passing an all-time high of $US2075 an ounce, as the coronavirus pandemic causes investors to seek out out safe havens to protect their wealth from the effects of economic uncertainty and unprecedented global stimulus.
For Australia’s gold miners, the yellow metal’s 30 per cent price rally has provided a boost to profits. Since January, shares in Northern Star have surged by 23 per cent and Saracen shares by 57 per cent.
Under the terms of the deal, which the companies say would achieve up to $2 billion in cost savings, Saracen shareholders would receive 0.3763 Northern Star shares for each Saracen share on the record date and a special dividend of 3.8¢ a share. Shareholders of Northern Star would own 64 per cent of the combined entity and Saracen shareholders would own the remaining 36 per cent.
The proposed merger comes after Saracen and Northern Star have separately snapped up 50 per cent stakes in the Kalgoorlie Super Pit, one of the country’s largest gold mines, and become joint-venture partners.