Newcrest Mining to buy Pretium Resources for $3.8bn, its second Canadian gold mine
The gold miner has doubled down on its big bet that Canada holds the best prospects for future growth.
Newcrest Mining will pay $US2.8bn ($3.8bn) for Canada’s Pretium Resources in the company’s biggest deal since its acquisition of Lihir Gold a decade ago.
The Australian gold major will offer cash or scrip to Pretium shareholders in a friendly deal, paying a 22.5 per cent premium, or $C18.50 a share, for Pretium stock.
The takeover offer, which is supported by Pretium’s board, will extend Newcrest’s reach in British Columbia.
Pretium’s primary asset is the 300,000 ounce a year Brucejack mine, which sits 140km away from Newcrest’s Red Chris mine for which it paid $US806.5m ($1.1bn) for a 70 per cent stake in 2019.
Newcrest has offered $C18.50 a share cash to Pretium’s shareholders, or 0.804 Newcrest shares for each Pretium share on issue — or a combination of cash scrip, if holders prefer.
The scrip portion of the offer was enabled by Newcrest’s decision this year to relist its stock on the Toronto exchange after a long absence.
Brucejack produced 348,000 ounces of gold in 2020 at an average all-in-sustaining cost of $US981 an ounce, and Newcrest boss Sandeep Biswas said the asset added another major production centre to the company’s portfolio of top tier assets.
Brucejack will boost Newcrest’s output by about 15 per cent a year, to well over 2 million ounces a year for the next decade, with the mine having an estimated 13 year life.
Mr Biswas said it would deliver an immediate cash flow boost to Newcrest’s balance sheet.
“Following this transaction Newcrest will have exposure to six Tier 1 orebodies and a portfolio of organic growth options of unrivalled quality. The transaction will also drive a material increase in mineral resources, ore reserves and annual gold production,” he said.
Newcrest said it would fund the cash component of the offer from its own reserves. At the end of June, the company had $US1.9bn in cash at hand.
The takeover extends the trend of local gold majors looking outside of Australia for future growth.
In addition to Newcrest’s acquisition of Red Chris, Northern Star Resources, Evolution Mining and St Barbara have all looked to North America for future growth in gold output.