Key Highlights:
- Northern Star Resources Ltd (ASX: NST) has entered into a binding agreement to acquire De Grey Mining Ltd (ASX: DEG).
- De Grey shareholders will receive 0.119 new Northern Star shares for each De Grey share, valuing the deal at approximately A$5 billion.
- The acquisition focuses on De Grey’s flagship Hemi Project, a Tier-1 gold asset with estimated annual production of 530kozpa over its first decade.
- This move positions Northern Star as a top 10 global gold producer, targeting 2.5Mozpa production by FY29.
The Deal Breakdown
Northern Star will acquire 100% of De Grey through a court-approved scheme of arrangement. De Grey shareholders will gain shares in Northern Star, resulting in an implied offer price of A$2.08 per De Grey share—representing a 37.1% premium to De Grey’s last closing price. Post-transaction, Northern Star shareholders will own approximately 80.1% of the combined entity, with De Grey shareholders holding the remaining 19.9%.
What’s Driving the Acquisition?
The centerpiece of the acquisition is De Grey’s Hemi Project, located in Western Australia’s Pilbara region. This low-cost, large-scale gold development boasts Mineral Resources of 11.2Moz and Ore Reserves of 6.0Moz. With its forecast annual gold production of 530kozpa over a 10-year mine life, Hemi is a rare Tier-1 project that aligns perfectly with Northern Star’s growth strategy.
The deal also leverages Northern Star’s proven operational expertise and project development capabilities, notably from its ongoing KCGM Mill Expansion—the largest Australian gold project in a decade.
What’s in It for Shareholders?
- Immediate Premium: De Grey shareholders benefit from a significant upfront premium and the opportunity to gain exposure to Northern Star’s broader asset portfolio.
- Enhanced Scale and Reach: The combined entity will operate four production centers across two Tier-1 jurisdictions (Western Australia and Alaska), boasting proforma Mineral Resources of 74.9Moz and Ore Reserves of 26.9Moz.
- Improved Cost Positioning: With Hemi and other developments, Northern Star is expected to remain in the first half of the global cost curve, further solidifying its competitive advantage.
Leadership Perspectives
Stuart Tonkin, Managing Director and CEO of Northern Star:
“This acquisition strengthens Northern Star’s position as a global gold leader. The Hemi Project, combined with our existing portfolio, enhances our ability to deliver superior shareholder returns while maintaining our commitment to low-cost, high-quality production.”
Glenn Jardine, Managing Director of De Grey:
“The transaction provides our shareholders with an attractive premium while retaining exposure to Hemi’s future growth. Northern Star’s expertise and scale ensure that the full potential of this generational asset will be realized.”
What’s Next?
The transaction is subject to standard conditions, including shareholder and court approvals. Both boards unanimously recommend the deal, and De Grey directors intend to vote in favor, barring any superior proposal.
The combined group’s enhanced scale, diversified asset base, and operational efficiencies are set to create long-term value for all shareholders, making this acquisition a defining moment for both companies and the Australian gold sector.
