Northern Star Resources (ASX:NST,OTC Pink:NESRF) said on Monday (December 2) that it has entered into a binding scheme implementation deed to acquire De Grey Mining (ASX:DEG,OTC Pink:DGMLF).
Under the deal, Northern Star will take ownership of of De Grey, as well as its flagship Hemi gold project.
De Grey shareholders will receive 0.119 new Northern Star shares for each De Grey share held at the record date for the scheme, which represents an implied offer price of AU$2.08 per De Grey share.
The total equity value for De Grey is approximately AU$5 billion on a fully diluted basis.
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy and contributes to our purpose of generating superior returns for shareholders,” said Northern Star Managing Director Stuart Tonkin.
According to Northern Star, Hemi will make a valuable addition to its current portfolio given the project’s capacity to deliver “a low-cost, long life and large-scale gold mine in the Tier-1 jurisdiction of Western Australia.”
De Grey shareholders will retain material exposure to Hemi under the transaction.
“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,” said De Grey Managing Director Glenn Jardine in Monday’s release.
Northern Star shareholders will own approximately 80.1 percent of the combined group following the scheme’s implementation, while De Grey shareholders will hold the remaining 19.99 percent.
The deal will de-risk the development of Hemi through Northern Star’s proven development and operating expertise.
Located in Kariyarra lands, Hemi holds a resource estimate of 10.5 million ounces of gold and remains open in multiple directions. De Grey received a AU$150 million loan for Hemi from the Northern Australia Infrastructure Facility in August.
De Grey released a definitive feasibility study for Hemi in September 2023, and said at the time that a final investment decision was subject to project approvals and debt financing being finalised.
Norther Star intends to work toward finalising these approvals, and will also optimise development and mine planning. Implementation of the acquisition scheme is expected in late April or May 2025.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
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