US gold major Newmont has sweetened the deal for Australian gold miner Newcrest Mining.
Newcrest on Tuesday reported that it had received a revised non-binding indicative proposal from Newmont, under which the major is offering 0.40 of its own shares for each Newcrest share held. This was an increase on the 0.38 Newmont shares for every Newcrest share offer made in February.
In addition, the revised proposal permits Newcrest to pay a franked special dividend of up to $1.10 a share on/or around the implementation of the scheme arrangement.
The offer valued Newcrest shares at A$32.87 a share, a 46.4% premium to the company’s last closing price of A$22.45 a share on February 3 and valued the company at A$32-billion.
On completion of the transaction, Newcrest shareholders would own 31.1% of the combined company.
Newmont has told Newcrest that the revised proposal represented its best and final price in the absence of a competing proposal.
Newcrest on Tuesday told shareholders that after assessing the revised proposal, the company has agreed to grant Newmont the opportunity to conduct confirmatory due diligence to enable it to put forward a binding proposal. Due diligence is expected to be completed within approximately four weeks. Newcrest will also undertake confirmatory due diligence on Newmont during this period.
The revised proposal is subject to a number of conditions, including the completion of the due diligence studies, entry into a binding scheme implementation agreement, and the unanimous recommendation from the Newcrest board that shareholders vote in favour of the revised proposal, in the absence of a superior offer.
Newmont is one of the world’s largest gold producers, and also produces copper, silver, zinc and lead. The company holds assets in both North and South America, Australia and Africa, and is the only gold producer listed in the S&P 500 Index. In the third quarter of 2022, Newmont produced 1.49-million attributable ounces of gold and 299 000 attributed gold equivalent ounces from co-products.
Newcrest owns a portfolio of predominantly low-cost, long-life mines in Australia, Canada and Papua New Guinea. In the December quarter, Newcrest produced 512 000 oz and 35 000 t of copper at an all-in sustaining cost of $1 082/oz.
Newmont on Tuesday told shareholders that the proposed combination would create the industry’s best portfolio of world-class assets with the highest concentration of top-tier operations, primarily in favourable, low-risk mining jurisdictions. Newmont would further strengthen its portfolio by increasing yearly copper production and adding nearly 50-billion pounds of copper reserves and resources to its balanced and diverse asset base.
“We are entering a new era in which mining companies must hold themselves to a higher standard of sustainability and long-term value creation. 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,” said Newmont president and CEO Tom Palmer.
“Together as the clear gold mining leader, we would be well-positioned to generate strong, stable and lasting returns with best-in-class sustainability performance for decades to come.”
Palmer noted that by applying Newmont’s long track record of safe and profitable mining, the combined group is expected to deliver significant annual synergies and create long-term value for all stakeholders. The business would be immediately supported by Newmont’s scalable, integrated operating model with a deep bench of subject matter experts and existing regional platforms in Australia and Canada. This would allow the business to leverage the combined group’s global supply chain and generate substantial synergies through the implementation of Newmont’s proven Full Potential continuous improvement programme.