Newmont may look to offload assets in Newcrest gold merger bid

It is understood that the world’s largest gold miner Newmont has no plans to sell any Australian assets, but those offloaded overseas may be of interest to other gold miners listed in Australia. Picture: AFP

A buyout of Newcrest by Newmont may have a way to play out yet, but already there is a guessing game unfolding about what assets could be sold if the two gold miners merge.

Newcrest announced on Monday that it had received an indicative proposal from the world’s largest miner, the US-based Newmont, offering 0.38 Newmont shares for each Newcrest share held, implying an offer price of $27.16 a share as at Friday or $24.3bn for the company.

It is understood that should a deal proceed, Newmont would sell some of its lesser-quality assets. Observers had earlier said the fact Newmont was trying to buy Newcrest suggested it had some question marks about the future success of its own portfolio.

So far, it is understood that Newmont has indicated it would offload some of the smaller mines it had secured when it purchased Goldcorp, and there would not be any assets sold in Australia.

Goldcorp was bought by Newmont in 2019 in a $US10bn scrip deal – a transaction that cemented it as the world’s largest gold miner.

At the time of the deal, Newmont said it would sell $US1bn to $US1.5bn in assets over the next two years.

It is understood that Newmont has no plans to sell any Australian assets, but those offloaded overseas may be of interest to other gold miners listed in Australia.

These could include Northern Star Resources, Evolution Mining, or Silver Lake Resources.

Evolution bought the Red Lake mining operation in Canada in 2019 for $US475m from Newmont Goldcorp, as it was then known.

Another divestment candidate would be Newcrest’s $US1bn stake in Lundin Gold.

Lundin is a listed Canadian gold company that owns the Fruta del Norte goldmine in southeast Ecuador.

Some suitors would have shied away from Newcrest due to its Lihir Gold operation in Papua New Guinea that involves deep- sea tailings. This involves depositing the waste from the mining process into the sea, which is controversial from an environmental perspective.

But the thinking is that Newmont must have gained comfort around the practise before bidding for the target.

Yet, market observers say it may prevent other rival suitors coming forward.

Newcrest is working with defence advisers Gresham and JPMorgan and law firm Herbert Smith Freehills, while Newmont is working with Bank of America and Lazard.

Newcrest shares closed down 38c to $25.22 on Thursday, while Newmont was trading at $48.35, down 37c.