SYDNEY - Australian gold mining giant Northern Star Resources said 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 Aus$5-billion (US$3.2-billion), it said.
Gold prices have surged about 30 percent 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 percent while De Grey, also based in Perth, surged 31 percent.
The deal, which was unanimously approved by De Grey's board, implies a price per share more than 37 percent 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.