Newcrest Mining, Australia’s biggest gold miner, announced on Tuesday it would buy Canadian rival Pretium Resources in a deal worth about $2.8bn.
The offer gives the Canadian miner an enterprise value of about C$3.5bn ($2.8bn), factoring in debt and $202.5m in cash.
Already one of the 10 biggest gold miners in the world by production, Newcrest said Pretium shareholders would receive consideration of C$18.50 a share for the remainder of the company it does not already own.
That compares with its last traded price of C$15.10 on the Toronto Stock Exchange on Monday, up 0.3 per cent and hovering around a 2021 high.
Pretium’s main asset is the Brucejack operation in the western Canadian province of British Columbia, about 140km from Newcrest’s majority-owned and operated Red Chris mine.
Newcrest described Brucejack as “one of the highest-grade operating gold mines in the world” and said a March 2020 technical report on the mine estimated gold production of 311,000 ounces per year at an all-in sustaining cost of $743/ounce over a projected 13-year mine life. The Australian company produced 2.1m ounces in its financial year ended June 30, at an all-in sustaining cost of $911/ounce.
Newcrest already has a 4.8 per cent shareholding in Pretium, but would require approval from two-thirds of the target’s shareholders, the Supreme Court of British Columbia and other regulatory approvals in order to go ahead.
“Brucejack is a Tier 1 mine in a Tier 1 jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long-life, low-cost portfolio,” Sandeep Biswas, Newcrest chief executive, said in a statement.
Newcrest shares fell 2.9 per cent in morning trading in Sydney.