Northern Star Resources to acquire De Grey Mining and Hemi gold deposit
Mon Dec 02 2024
Northern Star Resources Ltd (ASX:NST) is set to acquire gold miner De Grey Mining Limited (ASX:DEG), owner of one of the world’s largest undeveloped gold projects, for around $5 billion. The deal — a scheme of arrangement — will see De Grey shareholders entitled to 0.119 new Northern Star shares for each De Grey share held at the scheme’s record date, representing an implied offer price of $2.08 per De Grey share.
This price represents a 37.1% premium to De Grey’s last closing share price of $1.52 per share on November 29. DEG is trading around 26.8% higher, to $1.93 per share, today on the news, while NST is down 6.8% at $16.19.
Hemi gold project
Acquiring De Grey will provide Northern Star access to a low-cost, long-life and large-scale gold development project — the Hemi gold deposit. De Grey is developing the Hemi deposit in the Pilbara region of Western Australia, which has a mineral resource estimate of 264 million tonnes at 1.3 g/t gold for 11.2 million ounces.
Hemi is forecast to produce 530,000 ounces of gold per annum over its first 10 years of operation. Construction at Hemi started in mid-2024 and the first gold production is expected in mid-2026. A final investment decision is subject to the finalisation of project approvals and project debt financing.
Enhances Northern Star’s asset portfolio
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy and contributes to our purpose of generating superior returns for shareholders,” Northern Star managing director and chief executive officer Stuart Tonkin said.
“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.” Once the deal is complete, NST shareholders will own just over 80% of the combined entity, with DEG shareholders owning the balance.
Highly attractive opportunity
The De Grey board has unanimously recommended the scheme with managing director Glenn Jardine saying, “The transaction 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.
“Given the high-quality nature of Hemi, De Grey is in the fortunate position to have had many avenues to progress the asset, including M&A (mergers and acquisitions). “We have assembled a wonderful project team to undertake the work required to bring this generational asset to its current position and the integration of this team into Northern Star will ensure continued momentum and sharing of Hemi knowledge.
Northern Star’s current portfolio comprises three production centres situated in iconic gold mining regions. This includes the Kalgoorlie and Yandal centres in WA and the Pogo centre in Alaska, US. If the acquisition goes to plan, in Hemi, Northern Star will gain a third production centre in Western Australia — its fourth centre in total — which would lift the combined entity’s growth to around 2.5 million ounces per annum.
Source: https://www.proactiveinvestors.com.au/