Gold miner Newcrest has struck a $US2.8 billion ($A3.7 billion) deal to acquire Toronto-listed rival miner Pretivm Resources, marking a significant step in the company’s expansion plans.
Newcrest on Tuesday said the cash-and-shares deal would lift its gold production volumes by about 15% to maintain output at more than 2 million tonnes a year. The miner produced just over 2.1 million ounces in the year to June.
Newcrest shares ended the day at $A24.961, down 1.56% as investors digested the deal. The shares had been down more than 5% in early trading.
Newcrest’s offer of $C18.50 ($20) a share, which represents a 22.5% premium on Pretivm’s last closing price, has been unanimously recommended by Pretivm’s board of directors. Newcrest, which already owns 4.8% of Pretivm, said the deal valued the company at $US2.8 billion ($A3.7 billion).
The offer is made up of cash and Newcrest shares. Pretivm shareholders will be able to elect either $C18.50 in cash or 0.8084 Newcrest shares for each Pretivm share, subject to proration and an aggregate cap of 50% cash and 50% Newcrest shares. Pretivm shareholders who do not elect cash or Newcrest shares subject to proration) will receive default consideration of $C9.25 per Pretivm share in cash and 0.4042 Newcrest shares per Pretivm share.
Newcrest says it will issue a maximum of just over 72.3 million shares under the offer.
Pretivm is the owner of the Brucejack operation in Canada’s highly prospective Golden Triangle region of British Columbia, Canada where Newcrest already owns the highly prospective Red Chris mine.
Brucejack began commercial production in July 2017 and is considered to be one of the highest-grade operating gold mines in the world.
It produces around 311 ounces of gold a year that will take Newcrest’s annual production in a full year to around 2.4 million ounces and ensure the company’s long-term target of keeping output at or above the 2-million-ounce mark is maintained.
The Brucejack mine and surrounding tenements are about 140 kilometres from Newcrest’s existing Red Chris gold copper mine which is being expanded over the next five years.
Following the transaction, Mr Biswas said Newcrest would have exposure to six tier-one orebodies in Australia, PNG and Canada and a portfolio of organic growth options of unrivalled quality.
“The combination of Newcrest and Pretivm will create the leading gold miner in British Columbia’s Golden Triangle, operating both the Brucejack and Red Chris mines.
“The transaction will also drive a material increase in mineral resources, ore reserves and annual gold production,” he said in Tuesday’s statement.