NST and De Grey Mining (DEG AU, BUY, A$2.90 Price Target) have entered a binding scheme of arrangement that will see NST acquire DEG for an implied value of A$4.7b. The all-share acquisition is set to transform the medium-term outlook for NST, with Hemi boosting medium-term group gold production by ~30% while lowering group AISC by ~6%. Hemi is a world class development project, expected to produce over 530kozpa from FY27 with scope to push production beyond 700kozpa. The deal remains subject to normal conditions, and we have incorporated the transaction into our forecasts for NST, recognising that there remains scope for superior proposals from third parties. The translation is ~20% earnings dilutive for FY25-FY26, but once Hemi commences production boosts group earnings by ~33% for FY28-FY34. We view the transaction as value accretive for NST, lifting our price target 2% to A$21.00 and reiterate our BUY rating.
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