Mining Matters

With gold prices reaching record heights, and anticipated to soar even further, gold mining is now more lucrative than ever. Over the last year, gold prices have surpassed $5,000oz so it is no surprise that some of the industry’s heavy weights have been grappling to expand their own portfolios. 

One company is currently standing out amongst them all, Australian gold mining juggernaut Northern Star Resources (ASX: NST).  

Northern Star acquires Hemi 

Amidst the recent global gold rush, Northern Star made a $5b bid for De Grey Mining late last year.  

Northern Star’s sights were set on the undeveloped Hemi gold project located in WA’s Pilbara region. The project boasts a mineral resource estimate (MRE) of more than 11.2Moz of high-quality gold.  

The project is anticipated to have an average annual production of 520koz over its first decade of operation and, based on a feasibility study done in 2023, to have a pre-tax free cash flow of more than $6.3b. 

Gold prices have nearly doubled since this initial study, meaning that potential payback from the initial investment could be made in a mere matter of months.   

Northern Star has already asserted itself as Australia’s largest gold mining company and continues to cement its position amongst elite international competitors.  

Northern Star has been obtaining some of WA’s most valuable assets in recent years. This includes the company’s successful $16b bid for Kalgoorlie-Boulder’s renowned Super Pit, which has an in-ground gold value estimate of $54b, in 2021.  

The De Grey takeover represents an opportunity for the value of Hemi to be fully optimised by leveraging Northern Star’s exploration, development and operating expertise.  

Northern Star’s bid for De Grey in December last year was followed by months of silence from Gold Road Resources (ASX: GOR), the majority shareholder of De Grey.  

After several months of anticipation, Gold Road advised that it intended to vote all the De Grey shares it held, 17.26% of shares valued at more than $1b, in favour of the takeover scheme. 

Following a shareholder meeting held in mid-April, it was confirmed that Northern Star would be adding Australia’s newest billion-dollar gold find to its portfolio.  

This came after 99.64% of De Grey shareholders voted in favour of the acquisition. 

Federal Court give greenlight 

Less than two weeks after Gold Road announced its support of the takeover, The Federal Court of Australia also gave its approval.  

De Grey announced that the scheme is now legally effective following its lodgement of the Federal Court’s orders, approving the acquisition, with ASIC. 

As per the terms of the acquisition, De Grey shareholders are entitled to receive 0.119 new Northern Star shares for each De Grey share held at the record date of the 28 April 2025.  

The scheme represented a 37.1% premium for shareholders to De Grey’s last closing share prices of $1.52 in late November last year. 

The scheme is anticipated to be implemented and the scheme consideration to be issued to De Grey shareholders on 5 May 2025.  

Northern Star’s managing director and chief executive Stuart Tonkin said in December last year that the acquisition strongly aligns with Northern Star’s strategy and contributes to its 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 WA, enhancing the quality of Northern Star’s asset portfolio to generate cash earnings,” he said. 

“This reinforces Northern Star’s position as the leading Australian ASX-listed gold company and a top 10 global gold major. 

“The addition of the Hemi project leverages Northern Star’s inbuilt project capability with the project team expected to transition from the Mill Expansion to Hemi. 

“The 27mtpa 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.” 

De Grey’s managing director Glenn Jardine added that the transaction between the companies is a highly attractive opportunity for De Grey shareholders for both the upfront premium and the ongoing exposure to Hemi and the broader Northern star portfolio. 

“The Transaction enables De Grey’s shareholders to retain material exposure to Hemi, whilst becoming approximately a 19.9% shareholder in a globally significant ASX-50 gold company with a portfolio of producing assets, highly experienced management and a track record of paying dividends.” 

What this means for the community 

Once operational, Hemi will be established amongst the country’s top five largest gold mines. The project holds substantial expansion potential beyond its initial 12-year mine life that include future underground operations and the likely development of regional deposits. 

The Pilbara has been previously dominated by iron ore mining and the Hemi gold project has the potential to diversify and enhance the resilience of the region’s economy.  

Development of the project presents massive job creation potential in the area with the opportunity to focus on employing locals and creating training pathways for students to create sustainable long term economic growth.  

De Grey has previously established initiatives that focus on education, health and the environment with significant financial commitments to the community within the region. 

With Northern Star’s positive reputation for community investment and development, it is likely these initiatives will not only be upheld but expanded.