SYDNEY: Australian gold mining giant Northern Star Resources said Monday it has agreed to buy a rival that owns a vast undeveloped gold project in a deal worth US$3.2 billion.
Northern Star said it would acquire full ownership of De Grey Mining along with its Hemi gold development in Western Australia’s Pilbara region.
The all-share offer valued De Grey at about A$5 billion (US$3.2 billion), it said.
Gold prices have surged about 30% so far this year, sparking a scramble for more supplies.
“De Grey’s Hemi development project will deliver a low-cost, long life and large-scale gold mine,” said Northern Star chief executive Stuart Tonkin.
In late morning trade on the Australian Securities Exchange, shares in Perth-based Northern Star fell 5.5% while De Grey, also based in Perth, surged 31%.
The deal, which was unanimously approved by De Grey’s board, implies a price per share more than 37% above De Grey’s closing price on Friday.
The share price premium was “adequate” considering the value of the Hemi project, which carried some development risks, said a report by RBC Capital Markets analyst Alex Barkley.
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