Newcrest backs Newmont’s $19.2 billion offer
Newcrest Mining announced that it would back Newmont Corp’s $19.2 billion offer to acquire 100 percent of the issued share capital in Newcrest by way of an Australian court-approved Scheme of Arrangement.
The merger of the two mining companies is subject to approval from shareholders of both companies and other regulatory hurdles, but if completed, Newmont would increase its annual gold production to about 8 million ounces with more than five million gold ounces per year coming from 10 long-life and low cost mines. The deal also thrusts Newmont in the copper mining sector through the acquisition of Newcrest with a combined annual copper production of approximately 350 million pounds from Australia and Canada.
The merger includes assets in favorable mining jurisdictions and will help Newmont in a time when gold miners worldwide are facing the prospect of stagnating production, harder-to-mine deposits and rising input costs.
“The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and other stakeholders. It creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favorable mining jurisdictions,” said Tom Palmer, President and CEO of Newmont. “Following a robust due diligence process, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets. Leveraging our experience from the acquisition of Goldcorp four years ago, we are positioned to deliver an estimated $500 million in annual synergies and an estimated $2 billion in incremental cash flow from portfolio optimization opportunities, both part of our strategy to maximize value for shareholders and other stakeholders.”
“This transaction also increases Newmont’s annual copper production – a metal vital for the new energy economy – and adds nearly 50 billion pounds of copper reserves and resources from Newcrest to our robust and balanced portfolio,” Palmer said in a statement. “We intend to quickly realize these opportunities to create superior value for our shareholders, workforce, host communities and governments.”
Newcrest’s Chairman, Peter Tomsett, added: “This transaction combines two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline. In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefitting from a material and growing exposure to copper and a market leading position in safety and sustainability. The Newcrest board is unanimously recommending the proposal. We are very proud of the entire Newcrest team for building a world-class metals business, which will form a key part of the combined group. We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future.”
This acquisition would create a world-class portfolio of assets with the highest concentration of Tier 1 operations, primarily in favorable, low-risk mining jurisdictions. Supported by this portfolio, Newmont will be well-positioned to generate strong, stable and lasting returns with best-in-class sustainability performance, well into the future.
Through the combination of high-quality operations, projects and reserves, this portfolio is expected to deliver an extensive portfolio of greenfield and brownfield growth options from the industry’s largest reserve and resource base. This includes 96 million ounces of gold reserves declared by Newmont and 52 million ounces declared by Newcrest, along with 111 million and 68 million ounces of gold resources, respectively. A significant majority of combined entity’s gold reserves will be located in the Americas and Australia including in Canada’s Golden Triangle.
Photo: Newcrest Mining, Red Chris Mine.