
Setting the Standard for Safe, Profitable and Responsible Gold and Copper Production from a World-Class Portfolio of Top-Tier Operations
Newmont Corporation (TSX: NGT) (NYSE: NEM) announced that following completion of due diligence it has entered into a binding Scheme Implementation Deed under which Newmont will acquire 100 percent of the issued share capital in Newcrest by way of an Australian court-approved Scheme of Arrangement.
“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 favorable mining jurisdictions,” said Tom Palmer, President and CEO of Newmont. “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 maximize value for shareholders and other stakeholders.”
Mr. 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 of copper reserves and resources from Newcrest to our robust and balanced portfolio7. We intend to quickly realize 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.”
TRANSACTION RATIONALE
The New Sustainability Standard
For the last eight years, Newmont has been recognized as the top gold miner in the Dow Jones Sustainability Index, and regularly ranks 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:
World-Class Portfolio
This acquisition would create a world-class portfolio of assets with the highest concentration of Tier 1 operations, primarily in favorable, 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:
Delivering Synergies
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. Building on the experience gained following the acquisition of Goldcorp, Newmont has identified the opportunity for substantial synergies:
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.
Australia
The Transaction brings together two of Australia’s largest gold producers and would reinforce Newmont’s long-standing commitment to safe, profitable and responsible gold and copper production in the country for decades to come.
Newmont will leverage its existing regional operating model in Australia and, following the Transaction, will combine and optimize both companies’ leaders, subject matter experts, supply chains and regional infrastructure to drive best-in-class performance.
Newmont intends to apply for a foreign exempt listing on the Australian Securities Exchange and establish Clearing House Electronic Sub-register System Depositary Interests on the ASX. Newcrest shareholders may elect to receive CDIs representing a unit of beneficial ownership in Newmont common stock based on their country of residence.
Papua New Guinea
Upon closing of the Transaction, Newmont will establish a regional presence and in-country offices in Papua New Guinea, committed to building and maintaining strong, proactive and mutually beneficial relationships with host governments and local communities while supporting safe and profitable operations.
Canada
Once complete, the Transaction will solidify Newmont’s position in Canada through the combination of operating mines and development projects, creating a Tier 1 district in British Columbia’s highly-prospective Golden Triangle.
The combination will also leverage Newmont’s existing regional operating model in North America to combine and optimize both company’s leaders, subject matter experts, supply chains and regional infrastructure to drive best-in-class performance.
Looking ahead, the Company’s expanded footprint in Canada, together with shared ore body experience and technical expertise, could unlock gold and copper opportunities from the combined organic project pipeline, including the key projects Galore Creek and Saddle North.
Newmont will maintain its current listing on the TSX following closing of the Transaction.
Driving Capital Allocation
Newmont remains committed to its capital allocation strategy, which starts with maintaining an investment grade balance sheet with strength and flexibility. The combined company’s balance sheet will be supported by an even stronger, lower cost, diversified portfolio focused in low-risk mining jurisdictions. With the sector’s largest reserve and resource base, the combined business will be in a very strong position to advance the most value-accretive development opportunities and sustainably improve overall shareholder returns.
The Transaction is highly accretive to Newmont shareholders which is further improved when anticipated synergies are fully realized within the first 24 months of closing. Additionally, Newmont intends to enhance cash flow by at least $2 billion in the first two years after closing through portfolio optimization.
Newmont will remain committed to maintaining its industry-leading dividend framework with a robust platform to drive leading returns throughout the price cycle:11
TRANSACTION SUMMARY AND CLOSE TIMELINE
GOVERNANCE
Gregory Boyce will continue as Chair of Newmont’s Board of Directors and the Board will select two directors from Newcrest to join the Newmont Board. Tom Palmer will continue as President and Chief Executive Officer of Newmont and will lead the combined company with a focus on safely and responsibly leading the combined workforce, integrating the acquired assets and delivering on shareholder commitments.
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1 Clearing House Electronic Sub-register System Depositary Interests representing a unit of beneficial ownership in a share of Newmont common stock. |
2 Premium analysis calculated by reference to the exchange ratio of 0.400x shares of Newmont for each Newcrest share held and a special dividend of up to USD$1.10 per Newcrest share. Share prices based on NYSE and ASX trading of Newmont and Newcrest shares, respectively, as at close of February 3, 2023. |
3 See endnote G regarding Tier 1 assets |
4 See endnote A regarding pre-tax synergies. |
5 See endnote B regarding portfolio optimization. |
6 Recommendation in the absence of a superior proposal emerging. |
7 Amounts presented on an attributable basis. Reserves and resources data for Newcrest are historical reserves estimates as at June 30, 2022, sourced from Newcrest’s company Annual Mineral Resources and Ore Reserves Statement, dated August 19, 2022. Newmont has been unable to update, and does not expect to be able to update, the Newcrest historical reserves estimates, prior to the completion of the Transaction. Accordingly, Newmont is not treating these historical estimates as current estimates of mineral resources or mineral reserves because a qualified person (as defined under SEC standards) has not done sufficient work to classify the estimate as a current estimate of mineral resources or mineral reserves. See endnote F. |
8 See endnote C regarding past performance. Amounts presented on an attributable basis of 6.0 million ounces of gold production for Newmont’s year ended December 31, 2022 and 2.0 million ounces of gold production for Newcrest’s year ended June 30, 2022, from respective company filings. |
9 See footnote 7 above and endnote F below. |
10 See endnote D regarding Full Potential improvements. |
11 Expectations regarding 2023 dividend levels are forward-looking statements. See endnote E regarding our dividend framework. |
Readers are reminded to refer to the endnotes to this press release for additional information. |
ADVISORS AND COUNSEL
In connection with the Transaction, Newmont has engaged BofA Securities, Centerview Partners LLC, Lazard and BMO Capital Markets as its financial advisers, and King & Wood Mallesons and White & Case LLP as its legal advisers. Mackenzie Partners, Inc. will act as proxy solicitation agent.
ABOUT NEWMONT
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. The Company is an industry leader in value creation, supported by robust safety standards, superior execution and technical expertise. Newmont was founded in 1921 and has been publicly traded since 1925.
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12 For a full list of toll-free phone numbers, refer to the following link: https://www.netroadshow.com/events/global-numbers?confId=51039 |
Readers are reminded to refer to the endnotes to this press release for additional information. |
At Newmont, our purpose is to create value and improve lives through sustainable and responsible mining.
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