Newcrest seeks improved Newmont offer

Newcrest Mining Ltd. [NCM-TSX, ASX], an Australian company with significant mining operations in Canada, has rejected a non-binding US$16.9 billion takeover proposal from Newmont Corp. [NGT-TSX, NEM-NYSE].

Newcrest also said its underlying profit was a better-than-expected US$293 million for the half year ended December 31, 2022, compared to US$298 million a year earlier.

Under the indicative proposal the U.S. gold mining giant would acquire 100% of the issued shares of Newcrest by way of a scheme of arrangement, for 0.380 Newmont share for each Newcrest share held.

Newmont said the proposed transaction would combine two of the sector’s top senior gold producers and set the standard for sustainable and responsible gold mining.

However, Newcrest said its board of directors has considered the indicative proposal and has unanimously determined to reject the offer as it does not represent sufficient value for Newcrest shareholders.

After the close of trading on North American stock markets, February 15, 2023, Newcrest released the following statement: “In order to determine if Newmont can provide an improved proposal for consideration by the board that appropriately reflects the value of Newcrest, the board has indicated to Newmont that it is prepared to provide access to limited, non-public information on a non-exclusive basis. The provision of this information is subject to certain conditions including signing of an appropriate non-disclosure agreement.

“There is no certainty that any further discussions with Newmont will lead to a revised proposal or any transaction,’’ Newcrest said.

The offer price, when announced, implied a premium of about 21% to Newcrest’s closing price of A$22.45 on February 3, 2023, when Newmont also closed at $66.70 on the TSX.

Newcrest is Australia’s leading gold miner and has major gold and copper operations in British Columbia including the Brucejack and Red Chris mines. In its production guidance for the 12 months ending June 30, 2023, Newcrest said it expects to produce between 2.1 million and 2.4 million ounces of gold and between 135,000 and 155,000 tonnes of copper.

That amount includes 320,000 to 370,000 ounces of gold from Brucejack, and 30,000 ounces of gold and 20,000 tonnes of copper from Red Chris.

Brucejack is approximately 70 kilometres north of the Red Chris mine, which the Australian company operates in a joint venture with Imperial Metals Corp. (III-TSX).

In a press release containing its results for the six months ended December 31, 2022 (first half of fiscal 2023), Newcrest said the financial and operating performance of Brucejack was impacted by the temporary suspension of operations following a tragic fatality in October, 2022.  “Gold production is expected to increase in the second half of fiscal 2023 driven by higher mill throughput, with Brucejack anticipated to deliver at the lower end of its guidance range for fiscal 2023.

Meanwhile, at Red Chris Newcrest said it remains focused on progressing the Block Cave Feasibility Study, which is expected to be completed in the first half of fiscal 2024, with no impact to the project development timeline expected.