Northern Star Resources and De Grey Mining announced that they have entered into a binding Scheme Implementation Deed (SID) under which Northern Star proposes to acquire 100% of De Grey. Upon implementation of the deal, Northern Star will buy De Grey and its flagship project, Hemi, a low-cost, long-life, and large-scale gold development project in the Pilbara region of Western Australia.
This Hemi Project is one of the most significant undeveloped gold projects in a Tier-1 mining jurisdiction globally, with Mineral Resources of 11.2Moz and Ore Reserves of 6.0Moz and forecast annual gold production of 530kozpa4 over its first 10 years. Northern Star’s extensive exploration, mine development, and operating expertise are expected to unlock the long-term value potential of the Hemi Project, which is forecasted to generate superior returns for all shareholders.
The combined Northern Star Group will operate across two Tier-1 jurisdictions and four production centers, with Proforma Mineral Resources of 74.9Moz and Ore Reserves of 26.9Moz.
Following the KCGM Mill Expansion and the development of Hemi, Northern Star is expected to be positioned in the first half of the global cost curve. And under the terms of the SID, De Grey shareholders would be entitled to receive 0.119 new Northern Star shares for each De Grey share held at the record date for the scheme (scheme consideration), representing an implied offer price of A$2.08 per De Grey share and a total equity value for De Grey of approximately A$5 billion on a fully diluted basis.
This scheme was unanimously recommended by the Board of Directors of De Grey, and each De Grey Director plans to vote all De Grey shares that they hold or control in favor of it. The scheme consideration represents a significant and attractive premium of 37.1% to De Grey’s last closing share price of A$1.52 per share on November 29, 2024, and 43.9% to De Grey’s 30-day volume-weighted average price of A$1.45 per share up to and including November 29, 2024. After implementing the scheme, Northern Star shareholders will own about 80.1% of the combined Group, and De Grey shareholders will own about 19.9%.
KEY QUOTES:
“The acquisition of De Grey is strongly aligned with Northern Star’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 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 FY297 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 recognize 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.”
– Northern Star’s Managing Director and CEO, Stuart Tonkin
“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. 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.”
“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.”
“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 maximize Hemi’s potential post-development.”
“I would like to thank the De Grey employees and my fellow Directors for their tireless work and achievements over the past five years, which has created significant shareholder value and de-risked Hemi to facilitate a transaction of this nature, and we look forward to implementing the transaction. “Alongside my fellow Directors, I have no hesitation in supporting the Transaction and am excited for the future prospects of the combined Group.”
– De Grey’s Managing Director Glenn Jardine
