Northern Star has acquired De Grey Mining, rocketing the miner to new heights.
A sector-changing acquisition seems to hit the gold industry every year – and 2025 is no exception.
In May, Northern Star Resources finalised its acquisition of De Grey Mining, positioning the company among the world’s top five gold producers.
The jewel in the crown is the Hemi gold project in Indee, Western Australia – a mine with a mineral resource estimate of 11.2 million ounces of gold and a projected annual output of 530,000 ounces.
A conceptual study of Hemi in December demonstrated the potential for underground mining to run in parallel with open-pit mining at the site, presenting a strong case for further studies, while not distracting from the primary focus of the Hemi project development.
The study followed Hemi’s mineral resource estimate increasing by 1.3 million ounces in November to sit at 264 million tonnes.
Now, under the terms of the acquisition, De Grey shareholders will receive 0.119 new Northern Star shares for each De Grey share held, equating to an implied offer price of $2.08 per share.
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy and contributes to our purpose of generating superior returns for shareholders,” Northern Star managing director and chief executive officer Stuart Tonkin said in December.
“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.”
Tonkin said the Northern Star team looks forward to integrating Hemi into its portfolio and building strong relationships with the Kariyarra People, the Traditional Owners of the land in which Hemi is situated, and additional stakeholders.
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy to generate superior returns for shareholders,” he said.
Hemi joins the Fimiston open pit, also known as the Super Pit, in Northern Star’s booming WA gold portfolio. Expected to continue operating until at least 2035, Northern Star is investing $1.5 billion to double the Super Pit’s milling capacity as it aims for 900,000 ounces of annual production by 2029.
Combined with Hemi, Northern Star is aiming to reach an annual output of 2.5 million ounces by the late 2020s.
This was underpinned by Northern Star’s strong December quarter, which saw 410,249 ounces of gold sold at an all-in sustaining cost (AISC) of $2128 per ounce. The Kalgoorlie production centre performed the strongest for the quarter, recording 208,035 ounces sold.
“Our continued focus on operational performance, cost control and capital discipline position us well for significant growth in free cash flow generation, complemented by a high gold price environment,” Tonkin said at the time.
“We remain on track to achieve our full year production and cost guidance.”
Northern Star closed the quarter with $265 million in net cash and $1.2 billion in cash and bullion.
Like the Northern Star team, those at De Grey are excited by the merger and the prospects it provides to Hemi.
“Given the high-quality nature of Hemi, De Grey is in the fortunate position to have had many avenues to progress the asset, including mergers and acquisitions,” De Grey managing director Glenn Jardine said in December.
“The transaction that we have entered with Northern Star 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.”
With the gold price seeing record prices of $US3300 per ounce and being projected to increase further, 2025 has set the scene for Northern Star to expand its Tier 1 gold mining portfolio.
This article appeared in the Winter edition of Mining Magazine.
