Northern Star Resources Acquires De Grey Mining: A Game-Changer for Australia’s Gold Sector
As 2024 draws to a close, the Australian mining industry is buzzing with excitement following the announcement that Northern Star Resources will acquire De Grey Mining for approximately $5 billion. This monumental deal is poised to reshape the landscape of Australia’s gold sector, particularly with the inclusion of De Grey’s Hemi gold project, one of the world’s largest undeveloped gold projects.
The Hemi Gold Project: A Jewel in the Crown
De Grey Mining is the sole owner of the Hemi gold project, located in the Pilbara region of Western Australia. The project boasts a remarkable mineral resource estimate of 264 million tonnes at 1.3 grams per tonne of gold, equating to an impressive 11.2 million ounces (Moz). With a forecasted production capacity of 530,000 ounces (oz) per annum over its first decade, Hemi is classified as a Tier 1 gold project. Once operational, it is expected to rank among the top five gold mines in Australia, with its first gold production anticipated in mid-2026.
Strategic Alignment with Northern Star’s Vision
Northern Star Resources, Australia’s largest ASX-listed gold miner, views the acquisition of De Grey as a strategic move that aligns perfectly with its long-term goals. Stuart Tonkin, Northern Star’s managing director and CEO, emphasized that the acquisition will enhance the company’s asset portfolio, generating superior returns for shareholders. By integrating Hemi into its operations, Northern Star will add a low-cost, long-life, and large-scale gold development project to its already impressive lineup.
Expanding Northern Star’s Production Footprint
Northern Star’s current portfolio includes three production centers in iconic gold mining regions: the Kalgoorlie and Yandal centers in Western Australia, and the Pogo center in Alaska. The Kalgoorlie center features the Kalgoorlie Consolidated Gold Mines (KCGM) operations, one of Australia’s largest open-pit gold mines, which produced 437,000 oz in the 2023–24 financial year. The Yandal center encompasses the Jundee, Thunderbox, and Bronzewing operations.
With the acquisition of Hemi, Northern Star will establish a third production center in Western Australia and a fourth overall. This strategic expansion is expected to increase Northern Star’s growth trajectory to approximately 2.5 million ounces per annum by FY29, further solidifying its position as a leader in the gold mining sector.
Unlocking Long-Term Value
Northern Star’s extensive experience in exploration, mine development, and operations is expected to unlock Hemi’s long-term value. Once the Hemi project is developed and the KCGM mill expansion is completed, Northern Star anticipates positioning itself in the first half of the global gold cost curve, which will enable the company to deliver strong returns for its shareholders.
Tonkin noted that the KCGM mill expansion is the largest Australian gold project in over a decade, providing Northern Star with a unique opportunity to mitigate risks associated with Hemi’s development through established relationships with contractors and suppliers.
Benefits for De Grey Shareholders
The acquisition offers several advantages for De Grey shareholders, including ongoing participation in the future of Hemi and the broader exploration portfolio. The deal de-risks Hemi’s development by leveraging Northern Star’s proven expertise and strong balance sheet. Additionally, De Grey shareholders will gain ownership in a globally significant ASX-50 gold company, benefiting from enhanced market positioning, significant trading liquidity, and a track record of consistent dividends.
Glenn Jardine, De Grey’s managing director, expressed optimism about the transaction, highlighting the attractive opportunity it presents for De Grey shareholders. He emphasized the high-quality nature of Hemi and the advantages of integrating their project team into Northern Star to maintain momentum and share knowledge.
A Fortuitous Timing
The timing of this acquisition is particularly fortuitous, as gold prices reached an all-time high of $US2790.07 ($4309) in October 2024 and have remained steady between $US2500–$US2800 ($3861–$4325). As we move into 2025, projections indicate that gold prices will continue to show strength, making this an opportune moment for Northern Star to expand its Tier 1 gold mining portfolio.
Conclusion: A Bright Future Ahead
The acquisition of De Grey Mining by Northern Star Resources is subject to several conditions and is expected to be finalized in late April or early May 2025. The scheme has received unanimous support from the De Grey board, marking a significant milestone in the Australian gold sector.
As the industry watches this development unfold, it is clear that Northern Star’s strategic acquisition will not only enhance its portfolio but also contribute to the overall growth and stability of Australia’s gold mining landscape. For those interested in staying updated on this evolving story, subscribing to Australian Mining will provide the latest news on product announcements, industry developments, and commodities.
English 