Newmont Mining, the world’s largest gold miner, is set to expand its operations even further with the acquisition of Australian mining company Newcrest. The deal, worth Aus$28.8 billion (R362 billion), will establish Australia as a global leader in gold production.
With this acquisition, Newmont cements its position as the world’s largest gold producer, with operations in North and South America, Africa, Australia, and Papua New Guinea. Shareholders of Melbourne-based Newcrest will receive 0.4 Newmont shares for each Newcrest share, resulting in a 31 percent stake in the combined entity.
The takeover, which is expected to be completed by the end of 2023, marks an important milestone in the gold mining industry. “The combined group will set a new benchmark in gold production while benefiting from a material and growing exposure to copper and a market-leading position in safety and sustainability,” Newcrest Chairman Peter Tomsett said.
This agreement comes after Newcrest’s board initially rejected an earlier US$17 billion offer as undervalued. The revised agreement now represents an appealing opportunity for both companies. “It’s a fantastic opportunity for Newmont because they’re going to acquire some very good assets at what I consider to be an attractive price,” said Daniel Morgan, a Barrenjoey mining equity analyst.
While the takeover requires approval from Newcrest shareholders at a meeting scheduled for September or October, as well as approval from competition authorities in Australia, Canada, and Papua New Guinea, it is unlikely to face significant obstacles. According to Morgan, the consolidation will have no negative consequences for consumers.
The combined entity, according to Newmont CEO Tom Palmer, will have an industry-leading portfolio and a long-term production profile in favourable mining jurisdictions. The merger combines Newmont’s expertise with Newcrest’s high-quality gold and copper assets, resulting in significant value-creation opportunities.
The Denver-based company anticipates annual synergies of $500 million and a cash flow of around $2 billion as a result of the acquisition. Palmer also emphasised the significance of copper in the emerging energy economy, noting that the transaction increases Newmont’s annual copper production and adds significant copper reserves and resources from Newcrest.
On the Australian stock exchange, Newcrest shares rose 1.3 percent to Aus$28.61 in response to the news. If the transaction goes through as planned, Newcrest shareholders will receive a tax-free dividend of up to US$1.10 per share.
The Newmont-Newcrest merger is a significant development in the gold mining industry, establishing a dominant player with extensive global reach and a diverse portfolio of gold and copper assets. The successful completion of the transaction will pave the way for increased production capabilities, increased synergies, and long-term value creation in the mining industry.
