Northern Star to acquire De Grey

Northern Star Resources (ASX: NST) will acquire 100% of De Grey Mining (ASX: DEG) and its flagship WA project, Hemi, under a binding scheme implementation deed.

The Hemi project is one of the largest undeveloped gold projects in a Tier-1 mining jurisdiction globally, with mineral resources of 11.2moz and ore reserves of 6moz and forecast annual gold production of 530kozpa over its first 10 years.

The combined Northern Star Group will operate across two Tier-1 jurisdictions and four production centres, with proforma mineral resources of 74.9moz and ore reserves of 26.9moz.

Under the scheme arrangement, De Grey shareholders receive 0.119 new Northern Star shares for each De Grey share held.

De Grey managing director Glenn Jardine comments on the acquisition.

“Given the high-quality nature of Hemi, De Grey is in the fortunate position to have had many avenues to progress the asset, including mergers and acquisitions,” he said.

“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 track record of paying dividends.

“Northern Star’s demonstrated skillset across exploration, development and production, will also maximise Hemi’s potential post development.”

Northern Star managing director and chief executive Stuart Tonkin says the acquisition of De Grey is strongly aligned with the company’s strategy and contributes to our 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.

“We remain committed to our profitable growth plan to 2mozpa by FY26, with the KCGM mill expansion and addition of Hemi propelling a significant further increase in Northern Star’s production to [about] 2.5mozpa by FY29.

“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.

“We recognise the excellent work the De Grey team has completed to date in taking the asset from an exploration discovery to a near shovel-ready mine.

“We look forward to working with the De Grey team and continuing the strong relationships with the Kariyarra people and other Traditional Owner groups along with local communities as we advance this project together.”

According to Northern Star, the company’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.