Gold miner Northern Star Resources is set to acquire De Grey Mining in a deal worth A$5 billion (US$3.26 billion), the companies said on Monday (Sunday GMT).
The acquisition will see De Grey shareholders receive 0.119 new Northern Star shares for each De Grey share held.
Northern Star will receive De Grey’s flagship project, Hemi, which is a low-cost, long-life and large-scale gold development project in the Pilbara region of Western Australia.
The Hemi Project will give Northern Star an additional Tier-1 future low-cost production centre, as Hemi is one of the largest undeveloped gold projects in a Tier-1 mining jurisdiction globally.
Hemi forecasts annual gold production of 530k ounces over its first 10 years and the combined Northern Star Group will operate across two Tier-1 jurisdictions and four production centres.
Upon completion of the deal, Northern Star shareholders will hold around 80.1% of the combined entity, with De Grey shareholders retaining around 19.9%.
Chief executive of Northern Star Stuart Tonkin said: “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."
De Grey’s managing director Glenn Jardine said: “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."
The acquisition represents a 37.1% premium to De Grey’s last closing share price of $1.52 per share on 29 November 2024, and a 43.9% premium to De Grey’s 30-day volume-weighted average price (VWAP) of $1.45 per share up to and including 29 November 2024.
Both companies’ boards unanimously recommended the acquisition.