Beament has taken Northern Star from 1 cent to A$11.74. “I just love mining. I just loved it from day one. Things change on a daily basis”
With 20m ounces of gold in the ground, Northern Star has started flexing deposits to the gold price, mining to margins of plus-50 per cent
Business schools in the future will use Bill Beament as a case study. He is unique in the gold industry for only buying assets at market lows, and then buying aggressively.
Beament built an underground contracting business and became managing director of a A$10m shell company, ASX-listed Northern Star, buying the Paulsens gold mine in Australia. Paying workers per tonne produced, he squeezed costs, upped output, drilled-out the mine life and was soon paying dividends. “We don't get tied down in long pre-shift meetings,” he says. “There's no rocket-science behind it.”
When gold tanked in 2013, cash flow at Barrick and Newmont started moving backwards and both companies put their Australian assets up for sale. Beament was the only bidder, lifting Northern Star's output sixfold in three months.
With 20m ounces of gold in the ground, he has pushed the company to the point that it is now “mining to margin”, flexing deposits with the dollar and the gold price, producing 900,000 ounces per annum at average grades of 8 grams per tonne and margins of 50 per cent, spewing-out free cash flow like a conveyer belt.
“That's the beauty of underground, selective, high-grade mining. It's not like an open-pit where you're stuck in a big shelf. We can adjust our fleets very quickly.”
He has also made his first foray outside Western Australia, paying $260m for the Pogo gold mine in Alaska. With zero debt and cash of A$288m ($201m), the shares
have gone from 1 cent to A$11.74 and the market cap is now A$7.5bn. What metrics does Beament rely on? Exploration spending versus acquisition costs per ounce. “We are adding mineable ounces with a $500 to $600 an ounce margin for $30 to $50 an ounce spend,” he has told The Sydney Morning Herald. “That return on capital is stunning.”
“I get more kicks out of our daily reports coming in and seeing how many metres we’ve developed, how many tonnes we’ve broken, how much gold we’ve poured and all that sort of stuff. That to me is more enjoyable than looking at share price.”
Still only 43, Beament has a feel for assets that rivals lack. “I just love mining,” he has told the Diggers & Dealers jamboree in Kalgoorlie. “I just loved it from day one. Things change on a daily basis. You dig stuff up, you blow stuff up and you get a final product. If you deliver operationally, everything else looks after itself.”
But he also has a sharper, cash-focused mindset than the wider industry, using over-subscribed book builds to bolster cash-funded deals. Northern Star is “a business first and a mining company second”, he reminds investors. “The real test of any company’s performance is what happens to its bank account.”
Even on overhead per ounce, half the level of larger peers, Beament beats the competition on every metric. “We've been pretty busy,” he recently told investors. “It never stops.”
NEWS & INTERVIEWS
» 60 Seconds with Bill Beament (Mining Journal)
» The Dirt Digger Whose Gamble is Now Worth $1.1bn (Perth Now)
» Gold Price Rout Will Shake Up the Sector (Sydney Morning Herald)
» Northern Star: Gold Acquisitions Getting Expensive (Sydney Morning Herald)