Northern Star Resources is set to acquire De Grey Mining, owner of one of the world’s largest undeveloped gold projects, for approximately $5 billion.
Under the terms of the scheme implementation deed, De Grey shareholders will be entitled to receive 0.119 new Northern Star shares for each De Grey share held at the scheme’s record date. This represents an implied offer price of $2.08 per De Grey share.
The scheme consideration represents a 37.1 per cent premium to De Grey’s last closing share price of $1.52 per share on November 29.
De Grey is currently developing the Hemi gold project in the Pilbara region of Western Australia, which has a mineral resource estimate of 264 million tonnes at 1.3 grams per tonne of gold for 11.2 million ounces (Moz) and is forecasted to produce 530,000 ounces per annum over its first 10 years.
Acquiring De Grey will provide Northern Star access to a low-cost, long-life and large-scale gold development project.
“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 scheme has been implemented, Northern Star shareholders will own approximately 80.1 per cent of the combined entity and De Grey shareholders will own the balance. The scheme has been unanimously recommended by the De Grey board.
“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),” De Grey managing director Glenn Jardine said.
“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.”
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 is successful, Hemi will provide Northern Star with a third production centre in WA – fourth centre in total – and will increase the combined entity’s growth pathway to approximately 2.5 million ounces per annum.
“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,” Jardine said.
“Alongside my fellow directors, I have no hesitation in supporting the transaction and am excited for the future prospects of the combined group.”
The Northern Star–De Grey deal joins the list of M&A that has taken place throughout the Australian gold sector in 2024. Other notable deals include the Red 5–Silver Lake Resources and Westgold Resources–Karora Resources mergers and the Greatland Gold–Newmont deal.
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