Newmont Takeover of Australian Rival Newcrest for $19 Billion

Author: Connor Campbell - Bullion & Economics Editor

Published: 18 May 2023

Last Updated: 25 May 2023


Newmont, the unrivalled titan of the bullion market, emerges victorious as it completes the ground-breaking acquisition of Australian rival, Newcrest Mining. This triumph further solidifies Newmont's position as the world's largest bullion producer, heralding an era of unmatched power and unparalleled potential in the global gold mining landscape.

Newmont Shines Bright in the Bullion Market!

The gold mining industry has witnessed a monumental shift as Newmont Corp., the world's largest bullion producer, successfully completes its historic acquisition of Australian rival Newcrest Mining Ltd. This landmark deal, valued at $28.8 billion Australian Dollars ($19.2 billion), surpasses Newmont's previous acquisition of Goldcorp Inc. in 2019, making it the largest deal in the history of the gold mining sector. The acquisition has received unanimous approval from Newcrest's board and is currently awaiting regulatory clearance.

Implications for Newmont New Acquisition

Newmont's acquisition of Newcrest Mining not only solidifies its position as the world's leading bullion producer but also significantly enhances its exposure to the gold market. This strategic move comes at a time when gold prices are reaching record highs, providing Newmont with a substantial competitive advantage.

The announcement of the acquisition has led to positive market reactions, with Newcrest's shares experiencing a significant increase in Sydney and Newmont's shares rising in New York. This underscores the investor optimism surrounding the synergies and growth opportunities stemming from the deal. The gold mining industry, facing challenges such as stagnant production and rising costs, has seen a surge in mergers and acquisitions as companies seek to increase efficiency and scale.

How Will Newcrest Mining Be Implemented Into Newmont?

Integrating Newcrest Mining into Newmont's operations presents both challenges and opportunities. Newmont aims to extract substantial cost savings and generate $500 million in annual synergies through the seamless integration of the two entities. The optimisation of the combined portfolio will be a key focus, with the goal of increasing cash flows by $2 billion within two years of the deal's closure.

As part of portfolio optimisation, Newcrest's Telfer and Havieron mines in Western Australia are likely candidates for divestment. London-based Greatland Gold Plc, already a partner in Havieron, emerges as a potential buyer. The divestment of these assets presents an opportunity for further industry consolidation and strategic asset reallocation.

Shareholder Benefits

Under the terms of the deal, Newcrest shareholders will receive 0.4 shares in Newmont for every share they own, granting them a 31% ownership stake in the combined group. Additionally, shareholders will receive a tax-free special dividend of up to $1.10 per share prior to the deal's closure. This attractive offer gives an implied share price of $29.27 Australian USD, representing a premium of over 30% compared to Newcrest's closing price on February 3, when the acquisition was initially proposed.

All That Glitters is Gold

The Newmont-Newcrest acquisition marks a significant milestone in the gold mining sector, reshaping the industry landscape and solidifying Newmont's position as the global leader in bullion production. The acquisition provides Newmont with enhanced exposure to gold, capitalising on record-high prices, while fortifying its copper resources in line with the increasing demand for this metal. The successful integration and optimization of operations, coupled with the divestment of non-core assets, are key factors that will contribute to Newmont's long-term success. In conclusion, the $19 billion Newmont-Newcrest takeover represents a monumental shift in the gold mining industry. Newmont's acquisition of Newcrest Mining cements its position as the premier global bullion producer and provides a solid foundation for sustained growth.

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