Newcrest and Newmont agree $17.8bn deal

August 2023 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

August 2023 Issue

In one of the world’s largest deals so far this year, US goldmining company Newmont Corporation is to acquire fellow producer Australia-based Newcrest Mining Ltd in a transaction valued at $17.8bn.

Under the terms of the agreement, Newmont will acquire all outstanding Newcrest shares and Newcrest shareholders will receive 0.400 Newmont shares or 0.400 Newmont crest depository interests (CDIs) for each Newcrest share.

“This transaction combines two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline,” said Peter Tomsett, chairman of Newcrest. “In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefitting from a material and growing exposure to copper and a market leading position in safety and sustainability.”

This acquisition creates a world-class portfolio of assets with the highest concentration of tier 1 operations, primarily in low-risk mining jurisdictions. Supported by this portfolio, Newmont will be well-positioned to generate strong, stable and lasting returns with best-in-class sustainability performance, well into the future.

“The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and other stakeholders,” said Tom Palmer, president and chief executive of Newmont. “It creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favourable mining jurisdictions.”

Following a robust due diligence process, Newmont identified a number of opportunities to unlock substantial value and intends to apply its experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets.

Moreover, leveraging its experience from the acquisition of Goldcorp in 2019, Newmont is positioned to deliver an estimated $500m in annual synergies and an estimated $2bn in incremental cash flow from portfolio optimisation opportunities – part of its strategy to maximise value for shareholders and other stakeholders.

Once the deal is closed, the Denver-based Newmont expects to have approximately 8 million ounces of total combined annual gold production, with more than 5 million gold ounces from 10 long-life and low-cost mines.

In addition, Newmont also foresees combined annual copper production of approximately 350 million pounds from Australia and Canada – gold output that would lift it to nearly double its nearest rival, Barrick Gold Corp, to make Newmont the largest US gold and copper producer by market capitalisation.

“This transaction increases Newmont’s annual copper production – a metal vital for the new energy economy – and adds nearly 50 billion pounds of copper reserves and resources from Newcrest to our robust and balanced portfolio,” continued Mr Palmer. “We intend to quickly realise these opportunities to create superior value for our shareholders, workforce, host communities and governments.”

The transaction, which is expected to be completed in the fourth quarter of 2023, requires Australia’s Foreign Investment Review Board (FIRB) approval as well as Newcrest and Newmont shareholders to vote in support the transaction, among other regulatory requirements.

“We are very proud of the entire Newcrest team for building a world class metals business, which will form a key part of the combined group,” concluded Mr Tomsett. “We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future.”

Fraser Tennant