Northern Star Acquires De Grey Mining for $3.25 Billion

Australia’s Northern Star Resources Ltd, one of the world’s leading gold producers operating mines and exploration programs in Western Australia and Alaska, on Monday said that it has agreed to acquire De Grey Mining Ltd for $3.25 billion.

Northern Star will acquire De Grey and its flagship project, Hemi, a low-cost, long-life and large-scale gold development project in the Pilbara region of Western Australia, the company said in a regulatory filing with Australian Securities Exchange (ASX) this morning.

The Hemi Project is one of the largest undeveloped gold projects in a Tier-1 mining jurisdiction globally, with Mineral Resources of 11.2 million oz (ounce) and Ore Reserves of 6 million oz and forecast annual gold production of 530,000 oz per annum over its first 10 years.

Northern Star’s extensive exploration, mine development and operating expertise is expected to unlock the long term value potential of the Hemi Project, which in turn, is forecast to generate superior returns to all shareholders.

The combined Northern Star Group will operate across two Tier-1 jurisdictions and four production centres, with Proforma Mineral Resources of 74.9 million oz and Ore Reserves of 26.9 million oz. Post the KCGM Mill Expansion and the development of Hemi, Northern Star is expected to be positioned in the first half of the global cost curve.

The Scheme Consideration represents a significant and attractive premium of: 37.1% to De Grey’s last closing share price of $0.99 per share on 29 November 2024; and 43.9% to De Grey’s 30-day volume-weighted average price of $0.94 per share up to and including 29 November 2024.

Upon implementation of the Scheme, Northern Star shareholders will own approximately 80.1% of the combined Group and De Grey shareholders will own approximately 19.9%.

Good Returns for Shareholders

Aligns Northern Star’s Managing Director and CEO Stuart Tonkin said that the acquisition of De Grey is aligned with Northern Star’s strategy and contributed to their purpose of generating superior returns for shareholders.

De Grey’s Hemi development project will deliver a low-cost, long-life and large-scale gold mine in the Tier-1 jurisdiction of Western Australia, enhancing the quality of Northern Star’s asset portfolio to generate cash earnings, he said.

“The addition of the Hemi Project leverages our inbuilt project capability with the project team expected to transition from the Mill Expansion to Hemi. The 27 MTPA KCGM Mill Expansion is the largest Australian gold project in over 10 years and provides Northern Star with the unique opportunity to de-risk the Hemi development pathway through our experience and relationships with contractors and suppliers,” he added.

De Grey’s Managing Director Glenn Jardine said that given the high-quality nature of Hemi, De Grey is in a position to have had many avenues to progress the asset, including M&A.

“The deal that we have entered with Northern Star today is a highly attractive opportunity for De Grey shareholders in terms of the upfront premium, as well as retaining ongoing exposure to Hemi and gaining exposure to the broader Northern Star portfolio,” he added.