Newmont Mining (NYSE: NEM) (TSX: NGT) could be the largest mining company in Australian history if its $17 billion takeover deal with Newcrest Mining (TSX: NCM) gets approved.
The deal was announced Monday and would also widen Newmont’s access to copper, which has risen in price due to its use in renewable energy and electric vehicles.
“We believe a combination of Newmont and Newcrest presents a powerful value proposition to our respective shareholders, workforce and the communities in which we operate,” said Tom Palmer, President and CEO of Newmont.
“The proposed transaction would join industry-leading portfolios of assets and projects to create long-term value across the combined global business, and we welcome the consideration of Newcrest’s board of directors.”
Newmont is already the world’s biggest gold miner with a market valuation of almost $40 billion. It made an earlier bid for Newcrest that the board rejected. Newmont is attempting to repurchase its former spinoff, Newcrest, which it established as its Australian subsidiary in the 1960‘s.
This offer is 4.7 per cent higher than a earlier proposal Newcrest rejected.
Newmont has submitted a non-binding proposal to acquire 100% of the issued share capital of Newcrest Mining Limited. Learn more: https://t.co/XldVOon6pz pic.twitter.com/QO4r3W98XA
— Newmont Corporation (@NewmontCorp) February 6, 2023
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The biggest mining deal in Australian history
Barrick Gold (TSX:ABX)(NYSE:GOLD) CEO Mark Bristow clarified in the Financial Times on Monday that his company will not be bidding.
Barrick attempted unsuccessfully to acquire Newmont in a hostile takeover in 2019. Bristow had no plans to make an offer for Newcrest.
“It doesn’t make sense right now,” he said. “Growing bigger for the sake of growing bigger is not a strategy.”
Newmont owns and operates the large open-pit and underground Telfer gold-copper mine in the Pilbara region of Western Australia. It’s also the top gold producer in British Columbia, Canada, since its 2019 acquisition of the Red Chris copper and gold mine.
Also, the company took over Pretium Resources in Canada, which operated the Brucejack gold mine. Additionally, Newcrest operates the Lihir and Hidden Valley mines in Papua New Guinea.
Newmont’s merger proposal includes a swap of 0.380 Newmont shares per Newcrest share. Newcrest would own 30 per cent and Newmont would own 70 per cent of the combined company. Analysts and shareholders now suggest that since the bid has been launched, there may be counter-bids raised by other producers.
Gold prices have experienced a sustained period of strength since 2020 and have increased nearly 15 per cent since November 2022.
Newmont shares dipped $2.44 on the Toronto Stock Exchange and are now trading at $47.40.
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