Northern Star’s new Tier 1 asset

Northern Star Resources is a step closer to acquiring De Grey Mining and the latter’s Tier 1-scale Hemi gold project in the Pilbara.

Gold Road Resources, which owns approximately 17.26 per cent of De Grey, said it will back the acquisition when De Grey puts it to vote tomorrow.

“Gold Road advises that it is supportive of the scheme and will vote all De Grey shares it holds or controls in favour of the scheme,” the company said.

The transaction sees De Grey shareholders receiving 0.119 new Northern Star shares for each De Grey share held.

The combined group will boast 74.9 million ounces (Moz) of mineral resources and 26.9Moz of ore reserves, operating across four production centres, three of which are in Western Australia.

Hemi itself has the potential to produce 530,000ozpa of gold over its first 10 years of life, bringing the first Tier 1 gold mine to the Pilbara region.

“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,” De Grey managing director Glenn Jardine said when the acquisition was announced.

“The 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.”

The addition of Hemi comes at a time when Northern Star is advancing a mill expansion at its flagship Kalgoorlie Consolidated Gold Mines (KCGM), which will take potential throughput from 13 million tonnes per annum (Mtpa) to 27Mtpa.

Northern Star managing director and chief executive officer Stuart Tonkin said the mill expansion and Hemi development boast parallels.

“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,” he said.

“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.”

Following remaining approvals, the scheme is expected to be implemented on May 5.