Newmont launches US$16.9 billion bid for Newcrest

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

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. Newmont said its proposal would combine with Newcrest on the basis of 0.380 Newmont shares for each share of Newcrest, and result in the combined company being owned 30% by Newcrest and 70% by Newmont.

“We believe a combination of Newmont and Newcrest presents a powerful value proposition to our respective shareholders, workforce and communities in which we operate,’’ said Newmont President and CEO Tom Palmer.

Newmont is the world’s leading gold company and producer of copper, silver, zinc and lead. It has operations in North America, South America, Australia and Africa. They include Nevada Gold Mines LLC, a joint venture with Barrick Gold Corp. [ABX-TSX, GOLD-NYSE], which currently ranks as the world’s single largest gold-producing complex. Nevada Gold Mines is operated by Barrick Gold. It is a joint venture held 61.5% by Barrick and 38.5% by Newmont.

“The Newcrest board, together with its financial and legal advisers, is considering the indicative proposal,’’ Newcrest said in a press release. News of the offer comes after Newcrest recently announced leadership changes, including the retirement of CEO Sandeep Biswas.

The offer price implies 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. Newmont shares are currently trading in a 52-week range of $108.98 and $51.44.

Newcrest is Australia’s leading gold miner and has major gold and copper operations in British Columbia. A year ago, Newcrest snapped up the Brucejack gold mine in B.C. by acquiring all the shares of Pretium Resources it didn’t already own for $2.8 billion.

Brucejack is a high-grade gold underground mine located in northwestern British Columbia, approximately 65 kilometres north of Stewart.

Brucejack is approximately 70 kilometres north of Newcrest’s Red Chris copper-gold mine. Imperial Metals Corp. (III-TSX) formed a joint venture with the Australian company at Red Chris in March 2019, after agreeing to sell a 70% stake in the mine to Newcrest, which is now the operator.

Imperial continues to hold a 30% stake in the joint venture, which aims to leverage the Australian company’s technical expertise in block caving operations.

The partnership aims to leverage the Australian company’s technical expertise in block caving operations and use that to mine the deep resource beneath the current open pits. Their aim is to exploit high grades in the deep East zone.

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