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Northern Star Resources (ASX:NST) is set to acquire another Western Australian-focused gold producer, De Grey Mining (ASX:DEG) through a recommended scheme of arrangement which will see the former operate across four production centres and in two top mining jurisdictions.
The companies have entered into a Binding Scheme Implementation Deed (SID), through which Northern Star will acquire De Grey, according to a court-approved scheme of arrangement.
De Grey shareholders are in line to receive 0.119 new Northern Star shares for one De Grey share; priced at $2.08 per De Grey share.
The total equity value for De Grey would be around $5 billion on a fully diluted basis.
Central to the deal will be the acquisition of De Grey’s flagship Hemi project.
First discovered in 2019 as an area of high-grade, near-surface gold in WA’s Pilbara region, Hemi holds a mineral resource estimate (MRE) of 11.2 million ounces and ore reserves of 6 million ounces, making it one of the world’s largest undeveloped gold projects in a Tier-1 mining jurisdiction.
Forecasts suggest it will produce 530,000 ounces per annum during its first 10 years, with Northern Star aiming to plug extensive exploration, mine development and operating expertise into progressing this.
With the acquisition, a renewed Northern Star will be operating across four production centres and two Tier-1 jurisdictions, holding a MRE of 74.9 million ounces, together with ore reserves of 26.9 million ounces.
Northern Star’s managing director and CEO Stuart Tonkin said the acquisition was in-line with the company’s plans looking ahead.
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy and contributes to our purpose of generating superior returns for shareholders,” he 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.
“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 ~2.5Mozpa by FY29.”
Northern Star shares dropped following the news, and at 12:25 AEDT, they were trading at $16.48 – a fall of 5.88% since the market opened.
At the same time, De Grey shares were at $1.98 – a rise of 30.1% since the market opened.
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