Top Australian gold miner Newcrest has rejected a takeover proposal from US mining giant Newmont, arguing it undervalues the company, but has agreed to open its books to extract a higher offer.
Newmont, the world’s largest listed gold miner, launched a bid this month to acquire of Melbourne-based Newcrest’s shares at a 22 per cent premium to their previous closing price in a deal that values the company at nearly $US17 billion ($24.5 billion).
Newcrest’s flagship Cadia gold mine near Orange, NSW.Credit:Rob Homer
In an update to investors on Thursday, Newcrest said its board had considered the indicative offer but had unanimously determined to reject it as it “does not represent sufficient value for Newcrest shareholders”.
“In order to determine if Newmont can provide an improved proposal for consideration by the board that appropriately reflects the value of Newcrest, the board has indicated to Newmont that it is prepared to provide access to limited, non-public information on a non-exclusive basis,” it said.
Based in Denver, Colorado, Newmont has mining operations across the globe spanning gold, copper, silver, zinc and lead. It has two major Australian gold mines – Boddington in Western Australia and Tanami in the Northern Territory.
Melbourne-based Newcrest owns gold and copper mines in New South Wales, WA, PNG and Canada, and holds equity interests in gold assets in Ecuador.
Shares in ASX-listed Newcrest have climbed more than 8 per cent since it told investors that it was assessing Newmont’s all-scrip takeover offer.
However, analysts and investors have raised questions about whether the $27-a-share bid is high enough for Newcrest.
Morningstar analyst Jon Mills said the offer price was about 13 per cent below his Newcrest valuation of $31 a share.
Citi’s analysts said they did not think the offer adequately valued Newcrest’s growth options such as Canada’s Red Chris project and Wafi-Golpu in Papua New Guinea, as well as its considerable exposure to copper, a metal that will be increasingly needed to build renewable energy and electric vehicles.
“We think either the offer gets bumped or Newcrest continues on its capex-intensive but rewarding growth path alone,” they said.
US-based Newmont has mining operations across the globe spanning gold, copper, silver, zinc and lead. It has two major Australian gold mines – Boddington in Western Australia and Tanami in the Northern Territory.
Newcrest owns gold and copper mines in New South Wales, WA, PNG and Canada, and holds equity interests in gold assets in Ecuador.
If Newmont’s bid for Newcrest succeeds, it would mark the biggest takeover in the history of the gold mining industry.
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