Newcrest, the biggest Australian gold miner, has agreed to approve a blockbuster takeover by global gold heavyweight Newmont Corporation in an agreement that values the company at around $29 billion.
The acquisition, which is subject to shareholder and regulatory approval, would be the largest in the history of the gold mining industry, and would cement Newmont’s position as the world’s largest producer of the precious metal, with mines in the Americas, Africa, Australia, and Papua New Guinea.
On Monday, Newcrest’s board stated it would advise investors to support the deal, under which Newcrest stockholders will obtain 0.4 Newmont shares for every share they own, indicating a value of $29.27 per share. A previous offer, which Newcrest declined, would have enabled Newcrest shareholders to obtain 0.38 Newmont shares for every share they hold. According to the firm, Newmont’s recent bid also allows Newcrest to pay a special dividend of up to US $1.10 ($1.65) a share.
Newcrest chairman Peter Tomsett said, “This transaction will combine two of the world’s leading global gold producers, bringing forward significant value to Newcrest shareholders.”
Newmont has mining operations worldwide ranging from gold, silver, zinc and silver located in Denver, Colorado. It has two primary Australian gold mines – Tanami in the Northern Territory and Boddington in Western Australia.
Melbourne-located Newcrest has ownership of gold and copper mines in NSW,Western Australia, PNG and Canada, and owns equity interests in gold assets in Ecuador.
If the purchase goes through, Newmont will have nearly 8 million ounces of total annual gold output, with over two-thirds of that coming from 10 top-tier, long-life, and low-cost mines.
It also stated it will add around 35 million pounds of copper, a metal that will be required in larger quantities in the near future as raw material to design renewable energy infrastructure and electric vehicles.
The purchase, according to Tom Palmer, Newmont’s Australian-born president, represents extraordinary value for shareholders and other stakeholders, establishing an industry-leading portfolio with a multi-decade gold and copper production profile in favorable mining countries.
“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,” Palmer said.
The indicated value of Newcrest under the agreement is $26.2 billion on the basis of market values, including the dividend, whilst the enterprise worth is $28.8 billion.
The gold rates- a metal vastly seen as a “safe option” for investors to keep their wealth during periods of political and economic uncertainty, has been rallying in 2023 in the midst of rising inflation and the fears regarding the state of the global banking sector. The rate of the precious metals has reached near-record highs, pushing beyond $US2000 per ounce for the first time in more than a year.
The purchase is likely to be completed in the fourth quarter of 2023, according to Newcrest and Newmont.
- Published By Team Australia News