Newcrest Mining directors knock back US gold giant Newmont’s takeover bid

US gold giant Newmont has been told to sweeten its bid for $21.73bn Newcrest Mining, as the target’s directors leave the door open for a friendly deal.

Newcrest Mining directors have knocked back Newmont’s $24bn all-scrip bid for the company, while handily beating market expectations by declaring a bumper interim dividend.

But Newcrest left the door open to a deal, saying it was prepared to give Newmont a peek into its books – on a non-exclusive basis.

Speaking to reporters on Thursday, Interim chief executive Sherry Duhe would not be drawn on whether Newcrest was expecting an alternative bidder to emerge, telling reporters the company was simply reserving its rights to talk with other parties who might express an interest in doing a deal.

“There‘s nothing that has occurred that would warrant us saying anything public about any other conversations with any other companies, on any matters whatsoever,” she said.

Newmont offered 0.38 of its own shares for each Newcrest share on offer, an improvement from a previous bid of 0.363 shares.

But Newcrest directors said on Thursday the revised offer is still not good enough to win their support.

The company will pay a bumper US35c a share dividend on the back of a $293m half-year net profit, down slightly on the first half of the previous financial year, but with the dividend well ahead of analyst expectations.

Newcrest will pay a US15c a share interim dividend and a US20c special dividend as it faces off with Newmont over an all-scrip takeover offer from the US gold giant.

The company said the special dividend reflects Lundin Gold’s early repayment of a $US173m gold prepayment facility offered up by Newcrest.

“This demonstrates Newcrest’s confidence in its capacity to fund its pipeline of growth opportunities while providing strong shareholder returns through disciplined capital management,” the company said.

Newcrest booked earnings before interest, tax, depreciation and amortisation of $US919m for the year, a 24 per cent improvement on the first six months of the previous financial year, and earnings before interest and tax of $US460m, up 3 per cent.

Ms Duhe signalled that, while Newcrest was open to further talks with Newmont aimed at an improved bid, it was not offering the American major a full due diligence process, saying any future discussion would likely be centred around the valuation of Newcrest’s future growth projects – such as the Red Chris mine in Canada, and Wafi-Golpu in Papua New Guinea.

But she also indicated that Newcrest felt no pressure to do a deal.

“This company is something that I and our executive management team and our board passionately believe in. Our latest financial results show we have a strong company today, and we have a strategy to guarantee an incredibly bright future for years and years to come,” she said.

“We‘ve got tremendous low cost assets, and a long reserve life advantage over our peers. And our great growth potential is something we not only have the financial capability to fund but also the technical and operational know-how to deliver.”

With Newcrest effectively haven already beaten analyst expectations for its full dividend payout for the year, RBC analyst Alex Barkley said the payout was sending a signal to the market that Newcrest did not feel any funding pressure for its growth program.

“We expect the hefty dividend is in part Newcrest signalling it does not need external funding for its long-life projects. This would include via a potential merger with Newmont,” he said in a client note.

Ms Duhe said the company had not set any deadlines for Newmont to respond to its offer to open a conversation about an improved bid.

“We‘ve made that offer that we’re willing to share some limited non-public information, and so really the ball is in their court to decide if they want to have those conversations. We’ll just wait to hear from them on that,” she said.

Newcrest shares closed down 1.7 per cent at $23.90, giving it a market capitalisation of $21.4bn.