De Grey Mining is a well-known Western Australian Gold explorer company. This Company has discovered one of Australia’s most spectacular gold discoveries at Hemi in the Pilbara. The Company debuted on the ASX in 2002 as a multi-commodity explorer, and it has maintained a presence in the WA Pilbara region since then.
De Grey Mining’s main focus today is its Hemi gold Project in the Pilbara. In 2019, a near-surface gold discovery took place in an area called Hemi, hence the project name. This discovery is helping De Grey move towards its goal of defining a Tier 1 project with true potential. Mineralisation in the Hemi area has been detected over a vast area, and a 10.5 million-ounce mineral resource was released in November 2023. The discovery is still an open book in many ways.
The Hemi Project’s total mineral resource has now reached 12.7 million ounces. In order for De Grey to expand its search on Hemi, areas have been left untested through the extended Hemi project. However, targets with a higher chance of finding are being continuously drill tested.
Who’s Buying De Grey Mining?
Northern Star Resources (NST.AX), an Australian gold miner, announced on Monday that it will buy De Grey Mining (DEG.AX) in an all-share transaction valued at A$5 billion ($3.3 billion) as high gold prices drive industry consolidation.
This buy for Norther Star has minimal cost and medium—or long-term growth potential through the De Greys Hemi project, which is expected to be successful by the end of the decade.
This is after gold prices experienced a significant rise, with Australian-dollar gold prices hitting a record of A$4,240 a troy ounce by late October. Baden Moore of CLSA says, “Obviously, gold is expensive, but it’s a script deal, so we are happy with that.” Northern Star shares fell 5%, while De Grey shares increased 28% before closing at A$1.93.
Under the agreement, De Grey shareholders will receive 0.119 new Northern Star shares for each share held, meaning an offer price of A$2.08 per share. The offer reflects a 36.8% premium over De Grey’s Friday share closure of A$1.52. Northern Star CEO Stuart Tonkin said, “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.”
Hemi anticipates an average gold production of 553,000 ounces annually throughout the first five years. Northern Star owns and runs three producing facilities, including Kalgoorlie and Yandal in Western Australia and Pogo in Alaska.
By the end of the deal, Northern Star shareholders will have custody of approximately 80.1% of the Company, and De Grey shareholders will own the remaining. De Grey’s managing director, Glenn Jardine, mentioned that this deal is an excellent opportunity for De Grey shareholders regarding upfront premium while keeping continued exposure to Hemi and acquiring exposure to Northern Star’s portfolio.
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