Northern Star Resources (ASX: NST, BUY, PT A$21.00) have announced they have entered into a binding Scheme Implementation Deed (SID) under which they will acquire 100% of DEG. The proposed scheme represents an implied offer price of A$2.08 per share for DEG, equivalent to a 43.9% premium to 30-day VWAP. The proposed transaction is fully supported by the De Grey Board with each director intending to vote shares in their control in favour of the deal, subject to no Superior Proposal. We view the proposed transaction as a good result for DEG shareholders and reiterate our BUY recommendation at an increased Price Target from $2.80 to $2.90 after spot gold price increases. We recognise the NST offer as a reasonable valuation of the Hemi Project with a competing bid still possible however NST’s competitive offer has reduced the likelihood of a competing bid.
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