ASX-listed Northern Star Resources Ltd. (AU:NST) has proposed to acquire Australian gold miner De Grey Mining in an all-stock deal valued at $3.26 billion. The deal comes at the right time when gold mining companies are exploring new mines amid the record surge in the prices of gold. The price of a standard gold bar surpassed $1 million for the first time in August 2024. Following the announcement, NST shares dropped by over 5%, while De Grey Mining stock surged nearly 30% on Monday.
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Northern Star is a mining company focused on the development of gold resources through its projects in North America and Australia. Meanwhile, De Grey Mining is a Western Australian gold explorer known for its exciting new Hemi discovery in the Pilbara.
Northern Star Strengthens Portfolio with De Grey Mining
Through this deal, Northern Star aims to strengthen its portfolio by acquiring De Grey’s Hemi gold development project in Western Australia. The deal offers Northern Star low-cost, medium- to long-term growth through Hemi, which is expected to ramp up by the end of the decade.
Notably, the Hemi project is one of the largest undeveloped gold projects in a Tier-1 mining jurisdiction. It offers 11.2Moz (million ounces) in mineral resources, 6.0Moz in ore reserves, and projected annual gold production of 530kozpa (thousand ounces per annum) over its first 10 years. Combined with Northern Star’s extensive expertise in exploration and mine development, the acquisition is expected to drive long-term value for the Hemi Project.
As per the terms of the deal, De Grey shareholders will receive 0.119 new Northern Star shares for each share held, reflecting an offer price of AU$2.08 per share. Consequently, Northern Star shareholders will hold approximately 80.1% of the merged company upon completion, with De Grey shareholders owning the remaining stake.
Is Northern Star a Good Buy?
According to the TipRanks’ consensus rating, NST stock has a Moderate Buy rating backed by 11 Buy, two Hold, and two Sell recommendations. The average Northern Star price forecast for 12 months is AU$18.26, which is 10.6% higher than the current price.
