Gold Miner Newcrest Buys Australian Rivals For $19 Billion

(CTN News) – In a deal valued at A$28.8 billion (US$19 billion), Australian mining company Newcrest said Monday it had agreed to be acquired by US rival Newmont, creating the world’s largest gold producer.

With the acquisition of Newcrest, the US mining giant will cement its position as the world’s largest gold producer, with operations in North and South America, Africa, Australia, and Papua New Guinea.

It was announced by Newcrest that its shareholders will receive 0.4 shares of the US company with every share of Newcrest, giving them 31 percent of the combined group as a whole.

According to the company, the takeover is expected to be completed by the end of 2023 with an implied value of A$28.8 billion. The combined group will set a new standard in gold production while also gaining exposure to copper and a leading position in safety and sustainability, according to Newcrest chairman Peter Tomsett.

The Newcrest board had “unanimously” recommended to shareholders the takeover offer, he said, three months after rejecting a previous US$17 billion approach as too low.

According to Daniel Morgan, mining equity analyst at Barrenjoey, Newmont has a fantastic opportunity to acquire some very good assets at a price I consider to be attractive.

An approval from Newcrest shareholders is expected in September or October, as well as approval from competition authorities in Australia, Canada, and Papua New Guinea.

Morgan believes that it is unlikely to face serious competition challenges. Even though it will create the world’s largest gold miner, it will not lead to any consolidation that would harm consumers, he told AFP.

The chief executive of Newmont, Tom Palmer, observed that the combined group would have a portfolio that is among the best in the industry, showcasing “multi-decade gold and copper production profiles” in some of the most progressive mining jurisdictions in the world.

Having reviewed our analysis, we have identified several opportunities to unlock substantial value and we will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets as part of our efforts to unlock substantial value.

Upon completion of the takeover, Newmont expects to generate US$500 million in annual synergies and generate US$2 billion in cash flow.

This transaction also increases Newmont’s annual copper production — a vital metal for the new energy economy — and adds nearly 50 billion pounds of copper reserves and resources from Newcrest to its robust and balanced portfolio, according to Palmer.

Early afternoon trade on the Australian stock exchange showed Newcrest shares up 1.3 percent to A$28.61. The company will also pay its shareholders a tax-paid dividend of up to US$1.10 per share if the deal is successful.

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