Published: April 11, 2023 |

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Newmont laid down a best and final offer for Australia’s Newcrest Mining on Tuesday at A$29.4 billion ($19.5 billion) to close a deal that would extend Newmont’s lead as the world’s biggest gold producer.

If successful, the deal would lift Newmont’s gold output to nearly double its nearest rival Barrick Gold Corp. The merger is set to be the third-largest deal ever involving an Australian company and the third-largest globally in 2023, according to data from Refinitiv and Reuters calculations.

Newcrest said on Tuesday it had given U.S.-based Newmont access to its books following the sweetened all-share bid that has received some support from shareholders.

“I think this offer strikes a better balance. We are positively disposed to the Newcrest-Newmont merger and would intend to remain a shareholder of the combined entity were a transaction to proceed,” said Simon Mawhinney, chief investment officer at Newcrest’s top shareholder Allan Gray Australia.

Under the revised offer, Newcrest shareholders would receive 0.400 Newmont share for each share held, with an implied value of A$32.87 a share, up from a previous exchange ratio of 0.380 that Newcrest’s board unanimously rejected in February.

“This transaction would strengthen our position as the world’s leading gold company by joining two of the sector’s top senior gold producers and setting the new standard in safe, profitable and responsible mining,” Newmont CEO Tom Palmer said in a statement.

Newcrest shares closed 5.16 percent higher at A$29.74. Newmont’s U.S.-listed shares were down about 1.72 percent in premarket trading, which analysts said reflected some uncertainty over whether the deal would go through.

Newmont’s earlier offer had been seen as opportunistic by some investors given it came at a vulnerable time for the company. Newcrest is seeking a replacement for former chief executive officer Sandeep Biswas, who stepped down in December.

“The deal may still be seen as opportunistic by (Newcrest’s) board and shareholders given short-term operational issues, an interim CEO, and a perceived lack of market appreciation for long-term project potential,” RBC said in a report.

The latest bid is 16 percent higher than Newmont’s initial proposal, and represents around a 46 percent premium to Newcrest’s share price on Feb. 3 before Newmont’s first bid was announced.

Newmont is also offering a franked special dividend of up to $1.10 per share and is seeking unanimous board approval to proceed with the binding offer after a due diligence period of around four weeks.

“We always thought there would be another bump coming through. It’s probably enough for us,” said Andy Forster, senior investment officer at fund manager Argo Investments in Sydney.

Reuters had reported that Newmont was open to raising its offer price for Newcrest.

Barrick and miner Sibanye Stillwater have told Reuters they are not interested in bidding for Newcrest.

Newcrest’s operations include its top-class Cadia asset in Australia, an expanding footprint in North America and Papua New Guinea, and growth potential in copper, highly prized as key to the world’s energy transition.

Source: Reuters

Newmont is the world’s leading gold company and a producer of copper, silver, zinc, and lead. The company’s world-class portfolio of assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia, and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social, and governance practices. The company is an industry leader in value creation, supported by robust safety standards, superior execution, and technical expertise. Newmont was founded in 1921 and has been publicly traded since 1925.

Newcrest Mining Limited, together with its subsidiaries, engages in the exploration, mine development, mine operation, and sale of gold and gold/copper concentrates. It is also involved in the exploration of silver deposits. The company primarily owns and operates mines and projects located in Cadia and Telfer, Australia; and Lihir, Papua New Guinea. It also holds 70 percent interest in the Red Chris mine project located in British Columbia, Canada. Newcrest Mining Limited was founded in 1966 and is headquartered in Melbourne, Australia.

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