Newmont Corporation (NYSE: NEM) (TSX: NGT) has received the go-ahead for its pending acquisition of Newcrest Mining Limited (ASX: NCM) (TSX: NCM) from authorities in Papua New Guinea, a country that Newcrest has significant operations in.
The world’s largest gold miner announced Wednesday that it had obtained clearance from the country’s Independent Consumer & Competition Commission for the US$19.2 billion acquisition accepted by Newcrest in a May agreement that is expected to close in Q4 this year. Newcrest operates the Lihir open-pit gold mining operation in the country and also has a 50 per cent interest in Papua New Guinea’s Wafi-Golpu copper-gold mine in a joint venture with Harmony Gold Mining Company Ltd (JSE: HAR).
Newmont’s CEO Tom Palmer says the company plans to establish the country as a standalone fifth region in its portfolio in addition to North America, South America, Africa and Australia. Palmer says Newmont also plans to pursue a secondary listing for its assets in the country on Papua New Guinea’s National Stock Exchange following conclusion of the Newcrest acquisition.
“Lihir in Papua New Guinea is one of the world’s great gold mines and a Tier 1 operation by any measure. In addition to Lihir, we see profitable gold and copper growth through the world-class Wafi-Golpu project,” said Palmer.
Newmont also announced earlier this month that it had received clearance from the Canadian Competition Bureau for the acquisition. The company still has to obtain certain approvals and clearances from Papua New Guinea’s government and regulators for the transaction.
Wafi-Golpu project, PNG. Photo via Newcrest Mining
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Newmont still needs approval from other organizations
The companies have determined that a premerger notification under the Hart-Scott-Rodino Act will not be necessary in the United States for the acquisition to progress. The act provides the U.S. Department of Justice and Federal Trade Commission (FTC) with information about major mergers and acquisitions as part of the FTC’s Premerger Notification Program.
Newmont says it still needs to obtain approval from organizations such as the Australian Competition and Consumer Commission, the Australia Foreign Investment Review Board, the Korea Fair Trade Commission, Japan’s Fair Trade Commission and the Phillippine Competition Commission.
Upon conclusion of the acquisition, the combined company is expected to generate US$500 million in annual pre-tax synergies within the first two years of its establishment.
Papua New Guinea’s primary mineral exports are gold, copper, silver, cobalt and nickel. Vancouver’s K92 Mining Inc. (TSX: KNT) (OTCQX: KNTNF) is another gold mining company operating in the country, which owns and operates its flagship Kainantu Gold Mine in the country’s Eastern Highlands province.
Newmont shares dropped by 1 per cent Thursday to $53.69 on the Toronto Stock Exchange and have declined by over 20 per cent since the beginning of this year.
Newcrest stock dropped by 1.09 per cent to $22.63 on the TSX and has risen by 17.5 per cent since January.
rowan@mugglehead.com
