Following completion of due diligence, Newmont says it has entered into a binding Scheme Implementation Deed (SID) under which Newmont will acquire 100% of the issued share capital in Newcrest by way of an Australian court-approved Scheme of Arrangement.
This circa-$18 billion deal will result in Newmont – already the largest gold miner by production – inheriting a significant copper production base too.
Tom Palmer, President and CEO of Newmont, said: “The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and other stakeholders. 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, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets. Leveraging our experience from the acquisition of Goldcorp four years ago, we are positioned to deliver an estimated $500 million in annual synergies and an estimated $2 billion in incremental cash flow from portfolio optimization opportunities, both part of our strategy to maximise value for shareholders and other stakeholders.”
Palmer continued: “This transaction also increases Newmont’s annual copper production – a metal vital for the new energy economy – and adds nearly 50 billion pounds (22.7 Mt) of copper reserves and resources from Newcrest to our robust and balanced portfolio. We intend to quickly realise these opportunities to create superior value for our shareholders, workforce, host communities and governments.”
Newcrest’s Chairman, Peter Tomsett, added: “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. 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. The Newcrest Board is unanimously recommending the proposal. 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. We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future.”
For the last eight years, Newmont has been recognised as the top gold miner in the Dow Jones Sustainability Index, it says, regularly ranking as the most transparent company for sustainability disclosure in the S&P 500. Beyond Newcrest’s well-established sustainability credentials and top quartile industry ranking, Newmont will apply its proven sustainability practices and leadership to Newcrest’s assets by:
- Bringing a clear focus on mitigating safety risks along with visible, felt leadership in the field to drive a fatality-free business;
- Building on Newmont’s sustainability leadership and commitment to meaningful social engagement based on inclusion, transparency and integrity in order to be the partner of choice for governments, host communities, suppliers and workforce;
- Remaining committed to Newmont’s leading environmental stewardship practices and climate goals; and
- Creating a diverse, inclusive and equitable workplace where everyone is welcome, attracting and retaining the breadth of skills and innovation needed to continuously improve performance
This acquisition, Newcrest says, would create a world-class portfolio of assets with the highest concentration of Tier 1 operations, primarily in favourable, 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.
Through the combination of high-quality operations, projects and reserves, this portfolio is expected to deliver:
- Outstanding depth and breadth of global production focused across stable mining jurisdictions:
- Approximately 8 Moz of total combined annual gold production upon closing the transaction, with more than 5 Moz of gold, or two-thirds of total gold production, from 10 large, long-life, low cost, Tier 1 assets; and
- Combined annual copper production of approximately 350 MIb from Australia and Canada
- An extensive portfolio of greenfield and brownfield growth options from the industry’s largest reserve and resource base:
- 96 Moz of gold reserves declared by Newmont and 52 Moz declared by Newcrest, along with 111 Moz and 68 Moz of gold resources, respectively;
- Significant majority of combined entity’s gold reserves will be located in the Americas and Australia; and
- Value-generating projects across some of the world’s most prospective regions including Canada’s Golden Triangle
- Meaningful increase in copper reserves, a critical metal in facilitating the transition to a new energy economy;
- Maintaining a disciplined approach to mine planning and project development at reserve gold pricing, creating a resilient business to maximise long-term returns.
The combined business would be immediately supported by Newmont’s scalable, integrated operating model with a deep bench of experienced leaders, subject matter experts and existing regional teams in Australia and Canada, it says. Building on the experience gained following the acquisition of Goldcorp, Newmont has identified the opportunity for substantial synergies:
- $500 million of total annual pre-tax synergies anticipated to be achieved within the first 24 months following the completion of the transaction:
- Approximately $100 million of pre-tax general and administrative synergies driven by Newmont’s scalable, integrated operating model with existing regional teams in Australia and Canada;
- Approximately $200 million of supply chain synergies from best-in-class pricing and existing strong partnerships with key suppliers, smelters and equipment manufacturers through unprecedented economies of scale; and
- At least $200 million of benefits from Newmont’s proven Full Potential continuous improvement program, which improves costs and productivity through the rapid replication of leading processes and advanced technology.
Further value creation opportunities are anticipated as the Newcrest portfolio is fully integrated into Newmont, bringing together the industry’s best talent and processes across two key mining jurisdictions, including, among other things, the benefits from the experience of Newcrest’s world-class block caving team, it said.