By Nick Toscano
Newcrest, the largest Australian gold miner, has agreed to support a blockbuster takeover by global gold heavyweight Newmont Corporation in a deal that values the company at nearly $29 billion.
The deal, subject to approval from both companies’ shareholders and regulators, would be the biggest in the history of the gold mining industry, and would consolidate Newmont’s position as the world’s largest producer of the precious metal with mines spanning the Americas, Africa, Australia and Papua New Guinea.
Newcrest’s flagship Cadia gold mine near Orange, NSW.Credit: Rob Homer
Newcrest’s board on Monday said it would urge investors to support the deal, under which Newcrest shareholders will receive 0.4 Newmont shares for each share they hold, implying a value of $29.27 a share. An earlier offer, which Newcrest rejected, would have entitled Newcrest shareholders to receive 0.38 Newmont shares for each Newcrest share they own. Newmont’s new bid also permits Newcrest to pay a special dividend of up to $US1.10 ($1.65) a share, the companies said.
“This transaction will combine two of the world’s leading global gold producers, bringing forward significant value to Newcrest shareholders,” Newcrest chairman Peter Tomsett said.
Based in Denver, Colorado, Newmont has mining operations across the globe spanning gold, copper, silver, zinc and lead. It has two major Australian gold mines – Boddington in Western Australia and Tanami in the Northern Territory.
Melbourne-based Newcrest owns gold and copper mines in NSW, Western Australia, PNG and Canada, and holds equity interests in gold assets in Ecuador.
Newmont said it would have about 8 million ounces of combined annual gold production if the deal proceeds, with more than two-thirds of that production coming from 10 top-tier, long-life and low-cost mines.
It also said it would add about 350 million pounds of copper – a metal that will be needed in vastly greater quantities in the coming years as raw materials to build renewable energy infrastructure and electric vehicles.
Tom Palmer, the Australian-born president of Newmont, said the deal represented exceptional value for shareholders and other stakeholders, creating an industry-leading portfolio with a multi-decade gold and copper production profile in favourable mining jurisdictions.
“Following a robust due diligence process, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets,” Palmer said.
Based on market prices, the implied equity value of Newcrest under the deal is $26.2 billion, including the dividend, while the enterprise value is $28.8 billion.
The price of gold – a metal widely seen as a “safe haven” commodity where investors store wealth during times of political and economic uncertainty – has been rallying this year amid rising inflation and the concerns about the state of the global banking sector. The price of the precious metal has been trading at near-record levels, breaking past $US2000 an ounce for the first time in more than a year.
Newcrest and Newmont said they expected the deal to be finalised in the fourth quarter of 2023.
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