AUS
NZ
UK
CA
USA
IND
Highlights:
- Northern Star Resources (ASX:NST) to acquire De Grey Mining (ASX:DEG) for approximately $5 billion, expanding its operations to four production centres.
- Acquisition includes De Grey’s flagship Hemi project, one of the world’s largest undeveloped gold assets.
- Northern Star anticipates a significant increase in production, with an expected rise to ~2.5Mozpa by FY29.
In a bold strategic move, Northern Star Resources (ASX:NST) has announced its decision to acquire Western Australian-focused gold producer De Grey Mining (ASX:DEG) through a recommended scheme of arrangement. This acquisition will further solidify Northern Star’s position in the global gold market, expanding its operations to four production centres and two Tier-1 mining jurisdictions. The deal, which is set to create a leading gold powerhouse in Western Australia, reflects the growing consolidation trend in the mining industry, particularly in high-value gold projects.
Details of the Acquisition
Northern Star will acquire De Grey through a court-approved scheme of arrangement, where De Grey shareholders will receive 0.119 new Northern Star shares for every one De Grey share. This share swap places the price of De Grey shares at $2.08 each, valuing the company at approximately $5 billion on a fully diluted basis. The deal is poised to boost Northern Star’s operational footprint significantly, with the addition of De Grey’s flagship asset, the Hemi project, which lies within Western Australia’s Pilbara region.
The Hemi project is particularly significant, having been discovered in 2019. It holds an impressive mineral resource estimate (MRE) of 11.2 million ounces and ore reserves of 6 million ounces. As one of the world’s largest undeveloped gold projects, Hemi is expected to play a crucial role in the future growth of Northern Star, with production forecasts indicating an annual output of 530,000 ounces during its first decade of operation.
Strategic Fit and Long-Term Goals
The acquisition is closely aligned with Northern Star’s long-term growth strategy. Northern Star’s managing director and CEO, Stuart Tonkin, highlighted that the De Grey acquisition would contribute significantly to the company’s purpose of delivering superior returns to shareholders. The deal enhances Northern Star’s already impressive portfolio, which now includes a combined MRE of 74.9 million ounces and ore reserves of 26.9 million ounces.
Looking ahead, Northern Star is focused on growing its production to 2 million ounces per annum (Mozpa) by FY26, with the addition of Hemi and the KCGM Mill Expansion expected to drive that growth to approximately 2.5Mozpa by FY29. The Hemi project will not only add to the company’s gold reserves but will also strengthen its position in the Tier-1 mining jurisdictions of Western Australia, a region known for its world-class gold resources.
Market Reaction and Future Outlook
The market response to the acquisition has been mixed. Northern Star shares dropped by 5.88%, trading at $16.48 at 12:25 AEDT, while De Grey shares surged by 30.1%, reaching $1.98. Despite the initial market reaction, analysts view the acquisition as a strategic move that will yield long-term benefits, particularly with the high-quality asset base that Northern Star is acquiring.
