Northern Star Resources to Acquire De Grey Mining for A$5 Billion: A Strategic Move for Global Growth

About Northern Star Resources Limited

Northern Star Resources Ltd (ASX: NST) is a global-scale Australian gold producer focused on creating long-term value for investors. Their strategy is centred on sustaining critical mass by maintaining gold production from three world-class mining centres. They ensure a diversified asset base through high-quality operations and aim to extend asset lifespans to over 10 years by investing in exploration and expansions. With a commitment to low-cost operations, they continuously drive efficiencies and uphold strong financial disciplines, delivering superior results and a consistent track record of paying dividends to shareholders.

Growth Opportunities: A Strategic Fit for Northern Star

Northern Star Resources Ltd, one of Australia’s leading gold producers, has announced its agreement to acquire De Grey Mining Ltd in a strategic move that will significantly enhance its position in the global gold market. The acquisition, which will be executed through a recommended scheme of arrangement, will see De Grey shareholders receive 0.119 new Northern Star shares for each De Grey share held. This deal, valued at approximately A$5 billion, aligns with Northern Star’s long-term strategy of expanding its high-quality asset portfolio and driving superior returns for shareholders.

Northern Star’s acquisition of De Grey is a clear strategic move designed to accelerate its growth and position the company as a low-cost, high-margin producer in the gold sector. De Grey’s flagship asset, the Hemi gold project, is one of the largest undeveloped gold projects globally, situated in the Pilbara region of Western Australia. The project is anticipated to generate an annual production of 530,000 ounces per annum over its first decade, with Mineral Resources of 11.2 million ounces and Ore Reserves of 6 million ounces.

This addition will enhance Northern Star’s portfolio by adding a Tier-1, low-cost, long-life gold development project. The acquisition aligns perfectly with Northern Star’s goal of sustaining critical mass by maintaining gold production from world-class mining centres. Hemi, with its significant growth potential, will be a key asset in Northern Star’s expansion strategy, positioning the company to achieve its target production of 2.5Mozpa by FY29.

Moreover, the deal offers Northern Star an opportunity to optimise the Hemi project’s development, leveraging its extensive expertise in exploration, mine development, and operations. The addition of this asset will also strengthen Northern Star’s position in the Pilbara region, an emerging gold district with considerable exploration potential.

Financial Performance: A Strong Foundation for Growth

The acquisition of De Grey further solidifies Northern Star’s financial performance and its ability to deliver superior shareholder returns. Northern Star has consistently demonstrated strong cash earnings, underpinned by its diverse portfolio of high-quality assets and efficient operations. With the addition of De Grey’s assets, the combined group will operate across four production centres, with a total of 74.9Moz in Mineral Resources and 26.9Moz in Ore Reserves.

The acquisition is expected to enhance Northern Star’s financial position, with the company continuing to maintain its robust balance sheet and investment-grade rating. As of the acquisition announcement, Northern Star’s Proforma Mineral Resources stand at 74.9Moz, and its Proforma Ore Reserves are estimated at 26.9Moz. This growth in resource and reserve base significantly boosts the company’s ability to generate cash flow, further reinforcing its commitment to delivering superior returns to its shareholders.

De Grey’s shareholders will also benefit from the acquisition, receiving a 37.1% premium to De Grey’s last closing share price, valued at A$2.08 per share. This substantial premium demonstrates the attractiveness of the deal for De Grey’s shareholders, who will also retain exposure to the future upside of the Hemi project while becoming approximately 19.9% shareholders in the combined Northern Star Group.

Industry Context: Expanding in a Tier-1 Gold Jurisdiction

The global gold market continues to evolve, with mining companies focusing on securing high-quality assets in stable, Tier-1 mining jurisdictions. Northern Star’s acquisition of De Grey is well-timed, as the Pilbara region of Western Australia is emerging as a key global gold hub, boasting both exploration potential and large-scale gold projects. Hemi’s low-cost, long-life profile positions it as a key growth driver for Northern Star, particularly as the gold industry faces increasing pressure to deliver cost-effective production amid fluctuating gold prices and geopolitical uncertainty.

In addition, the acquisition strengthens Northern Star’s presence in Australia, one of the world’s most stable and resource-rich gold mining regions. Western Australia remains a top-tier jurisdiction, attracting investment due to its favourable regulatory environment, established infrastructure, and access to skilled labour. The acquisition of Hemi ensures Northern Star’s ability to continue operating in a world-class mining location with substantial exploration upside.