Newmont Reportedly Approaching $20 Billion Acquisition of Newcrest

Newmont Corp. is reportedly on the brink of acquiring Newcrest Mining Ltd. for approximately A$29.4 billion ($19.5 billion), as per sources close to the discussions. This move would solidify the US company’s status as the world’s leading gold producer.

The firms are said to be in the concluding stages of discussions and could declare a binding offer for the Melbourne-based company in the near future, said the insiders, who wished to remain anonymous due to not being permitted to speak publicly. Newcrest has granted an extension for Newmont’s due diligence until May 18, following the expiration of a previous deadline, as announced on Thursday.

However, the sources have cautioned that the advanced talks might still break down at the last moment. A spokesperson for Newmont was not immediately available for comment via phone, text, or email, and Newcrest has refrained from commenting.

Newcrest’s shares ended at A$28.25 each on Friday, bringing the company’s valuation to around $16.8 billion.

A potential deal could signify the pinnacle of a swift five-year amalgamation process among the world’s biggest gold mining companies, initiated by Barrick Gold Corp.’s $18 billion chase of Randgold Resources Ltd., and inclusive of a $5.2 billion acquisition of Yamana Gold Inc., finalized in March. This proposition from Newmont arrives shortly after the bullion’s spot trading price nearly reached an unprecedented record, in the midst of global concerns about stagflation.

Newmont initially made overtures to its Australian competitor in February, proposing a $17 billion non-binding offer, which was turned down by Newcrest’s board. The US firm subsequently increased the bid to $19.5 billion in April, labelling it as the ultimate and best offer. Newcrest’s CEO, Sherry Duhe, stated that the board was ready to endorse the proposal to its shareholders, contingent on successful due diligence

Global gold miners are grappling with the possibility of plateauing production, increasingly difficult mining deposits, and escalating operational costs. These hurdles in the industry are viewed as triggers for further mergers and acquisitions, with companies aiming to grow in size to enhance production and attain efficiencies via economies of scale.

Newcrest’s appeal to Newmont goes beyond its five gold mines spread across three continents. Approximately a quarter of the Australian company’s revenue is derived from copper. Newmont, currently dealing with a decade-long slump in gold, has expressed its interest in incorporating more of this transition metal into its portfolio.

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