Gold rush: Newmont still in pursuit of Newcrest
Global gold miner Newmont’s boss Tom Palmer is still wooing the board of Newcrest in an effort to win support for its rejected all-scrip bid.
Newmont boss Tom Palmer says the gold giant is still talking to the board of Newcrest Mining in an effort to win support for its all scrip bid for the Australian miner, but said the company would be “disciplined” in its approach to the takeover.
Speaking after Newmont delivered its fourth quarter earnings results overnight, Mr Palmer said the company was “disappointed” at the Newcrest’s decision to reject Newmont’s $24.5bn scrip bid for the company.
Newmont had offered 0.38 of its shares for each Newcrest share on offer – it’s return bid for the company after an earlier scrip offer was rejected.
But Newcrest’s board also rejected that offer, a 22 per cent premium to the company’s share price – but left the door open to a deal by offering Newmont access to some “non-public information” on a non-exclusive basis in order to try to push up the gold-giant’s bid.
Mr Palmer told analysts he believed the tie-up would still create “significant” value for shareholders of both companies.
“We are disappointed that the Newcrest board rejected our proposal, and we are currently engaging with the Newcrest team in relation to their offer to provide access to more information,” he said.
“And if we can reach an agreement, this combination of industry-leading talent and decades of collective experience would create significant value across the global business with an ideal mix of gold and copper.”
Newmont’s global mines produce 6 million ounces of gold in 2022, the company said overnight, at an average all-in sustaining cash cost of $US1211 an ounce.
The company said it generated $US1.1bn in free cash flow, and declared a US40c a share dividend for the December quarter.
The company said it expects to produce 5.7 to 6.3 million ounces of gold in 2023, at an average AISC of $US1150 to $US1250 an ounce.
Mr Palmer’s comments on the Newmont analyst call overnight are likely to spur keen interest from mid-tier gold miners who have been eagerly awaiting more gold mines to drop from the portfolio of the majors, suggesting that Newmont would likely follow its previous path in divesting lesser assets if a deal was done with Newcrest.
“As a reminder, upon completion of the Goldcorp acquisition, we focused on optimising the combined portfolio, completing asset sales of more than $US1.5bn from that combined portfolio within the first 12 months,” he said.
Mr Palmer declined to answer specific questions about the Newcrest transaction on the call, but told analysts the company – which already operates the Tanami and Boddington mines in the Northern Territory and WA – believed Australia was in its backyard.
And Mr Palmer also indicated the gold major would be comfortable in operating in Papua New Guinea, suggesting the company may not look to sell Newcrest’s Lihir operation if a transaction was completed.
“We have a core capability that’s running very large open pit and underground mines. We also have a core capability around social responsibility and being able to engage with communities. And in a balanced portfolio that has as a foundation top-tier jurisdictions, we can afford to balance some other jurisdictions that wouldn’t fit the top-tier category,” he said.
“Our portfolio today has us in Ghana, has us in Suriname. We’re down in Argentina. We’re in Peru. We’re exploring in French Guiana. So for us, it’s about understanding your core capabilities, understanding the foundation of your business and then ensuring you’ve got a balanced diverse portfolio that allows you to take some managed risk.”
Newcrest shares were down 58c to 22.62 at 12.30pm AEDT.
