Northern Star Resources’ $5 billion acquisition of De Grey Mining has set the mining industry abuzz. But how will it shape the country’s gold sector?
De Grey is the sole owner of the Hemi gold project in Western Australia, one of the world’s largest undeveloped gold projects.
Hemi has a mineral resource estimate of 264 million tonnes at 1.3 grams per tonne of gold for 11.2 million ounces (Moz) and is forecasted to produce 530,000 ounces (oz) per annum over its first 10 years.
As a result, Hemi is considered to be a Tier 1 gold project that, once gold production has commenced, will be a top five Australian gold mine. Its first gold is expected in mid-2026.
By acquiring De Grey, Northern Star – Australia’s largest ASX-listed gold miner – will add a low-cost, long-life and large-scale gold development project to its Tier 1 gold portfolio.
“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.
“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.”
Northern Star’s current portfolio comprises three production centres situated in iconic gold mining regions, the Kalgoorlie and Yandal centres in WA and the Pogo centre in Alaska, US.
The Kalgoorlie centre includes the Kalgoorlie Consolidated Gold Mines (KCGM) operations, which is one of the largest open pit gold mines in Australia, as well as the Carosue Dam operations and the Kalgoorlie operations.
The Yandal centre comprises the Jundee operations, the Thunderbox operations and the Bronzewing operations. Northern Star also has an international mining presence through its Pogo operations in Alaska.
By acquiring Hemi, Northern Star will have a third production centre in WA, and its fourth production centre overall. The acquisition will also increase Northern Star’s growth pathway to approximately 2.5Moz per annum by the 2028–29 financial year (FY29).
Northern Star’s extensive exploration, mine development and operating expertise will help unlock Hemi’s long-term value, and once Hemi’s development and the KCGM mill expansion has been completed, Northern Star is expected to be positioned in the first half of the global gold cost curve, delivering strong returns for shareholders.
“This reinforces Northern Star’s position as the leading Australian ASX-listed gold company and a top 10 global gold major,” Tonkin said. “The addition of the Hemi project leverages Northern Star’s inbuilt project capability with the project team expected to transition from the mill expansion to Hemi.
“The 27Mtpa KCGM mill expansion is the largest Australian gold project in over 10 years and provides Northern Star with the unique opportunity to de-risk the Hemi development pathway through our experience and relationships with contractors and suppliers.”
Once the scheme has been implemented, Northern Star shareholders will own approximately 80.1 per cent of the combined entity and De Grey shareholders will own the balance.
Other benefits of the acquisition for De Grey shareholders include:
- ongoing participation in the future of Hemi and De Grey’s broader exploration portfolio
- de-risks Hemi’s development through Northern Star’s proven development and operating expertise and strong balance sheet
- ownership in a globally significant ASX-50 gold company with enhanced market positioning, significant trading liquidity and track record of paying consistent dividends
- exposure to gold production through a Tier 1 portfolio that generates stable and robust free cash flow.
“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 (mergers and acquisitions),” De Grey managing director Glenn Jardine said.
“The transaction that we have entered with Northern Star (yesterday) 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.
“We have assembled a wonderful project team to undertake the work required to bring this generational asset to its current position, and the integration of this team into Northern Star will ensure continued momentum and sharing of Hemi knowledge.”
And the timing couldn’t be better. In October, the gold price reached an all-time high of $US2790.07 ($4309), and the price has remained steady between $US2500–$US2800 ($3861–$4325) ever since.
As we head into 2025, the gold price is projected to show no signs of slowing down, making this the perfect opportunity for Northern Star to expand its Tier 1 gold mining portfolio.
Its acquisition of De Grey is subject to several conditions and is expected to be completed in late April or early May in 2025. The scheme has been unanimously recommended by the De Grey board.
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