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Highlights
- Northern Star (NST) to acquire De Grey Mining (DEG) under a scheme of arrangement.
- The acquisition includes the Hemi gold project, a large-scale gold development in Western Australia.
- The combined entity’s gold production is set to grow significantly post-acquisition.
Northern Star Resources (ASX:NST) has announced its intention to acquire De Grey Mining (ASX:DEG), a move that will bolster its position as a leading gold miner. De Grey is the owner of the Hemi gold deposit, one of the world’s largest undeveloped gold projects, located in Western Australia. The acquisition is valued at approximately $5 billion through a scheme of arrangement.
Under the terms of the deal, De Grey shareholders will receive 0.119 Northern Star shares for each De Grey share held, translating to an implied price of $2.08 per share. This offer represents a 37.1% premium over De Grey’s last closing price of $1.52.
Upon the announcement, De Grey’s shares rose significantly, reflecting the market's positive sentiment toward the deal. However, Northern Star experienced a slight decline in its share value, trading at $16.19, down 6.8% at the time of the announcement.
Strategic Benefits of the Hemi Gold Project
The acquisition includes De Grey’s flagship asset, the Hemi gold deposit, situated in the Pilbara region. Hemi boasts a mineral resource estimate of 264 million tonnes at 1.3 g/t gold, translating to approximately 11.2 million ounces of gold. It is projected to produce 530,000 ounces annually over its first decade, emphasizing its potential as a long-life, low-cost gold mine.
Construction at Hemi commenced mid-2024, with the first gold production anticipated by mid-2026. Final investment decisions remain contingent on the completion of project approvals and securing project financing.
Enhancing Northern Star’s Asset Portfolio
Northern Star’s acquisition aligns with its strategy to strengthen its portfolio with high-quality, Tier-1 assets. With the integration of Hemi, the company will establish a third production hub in Western Australia, adding to its existing Kalgoorlie and Yandal centres. This development positions the combined entity to achieve annual production of around 2.5 million ounces.
Post-acquisition, Northern Star shareholders will hold approximately 80% of the combined entity, while De Grey shareholders will own the remaining share. The De Grey board has unanimously supported the proposal, highlighting the strategic value and growth prospects for both companies.
Northern Star’s managing director expressed confidence in the deal’s potential to enhance shareholder returns while integrating De Grey’s expertise to ensure the successful development of Hemi.
This acquisition marks a significant step in consolidating Northern Star’s position as a prominent player in the global gold mining sector.
