NCM Newcrest Mining Limited

By Rhiannon Hoyle

Australia's largest listed gold miner on Thursday rejected a roughly $17 billion bid from Newmont Corp. but said it is open to talks with the U.S. gold giant to advance what would be the largest-ever takeover in the global gold industry.

Melbourne-based Newcrest Mining Ltd., one of the world's largest gold-mining companies, said the all-stock proposal put forward by Newmont was too low. However, the company said it is willing to give its American rival access to limited nonpublic information to work out if it wants to increase its offer.

Newmont, which is based in Colorado and is the world's top gold producer, submitted a conditional and nonbinding indicative proposal on Feb. 5 to acquire the Australian company at a price of 0.380 Newmont share for each Newcrest share.

That was a sweetened offer from an initial rebuffed approach that valued each Newcrest share at 0.363 Newmont share, Newcrest said earlier this month.

Newmont has said the businesses are complementary and a combined entity--which, under the latest proposal, would have been owned 30% by Newcrest shareholders and 70% by Newmont--could "set the standard for sustainable and responsible gold mining."

A Newmont spokesman declined to comment on Newcrest's rejection Thursday.

Any information provided to Newmont would be on a nonexclusive basis and require a nondisclosure agreement, Newcrest said.

"This is really us offering, if Newmont is open to that, to just having a private conversation with some very limited nonpublic information just to help them better understand what we see as the true value of our company," said Interim Chief Executive Sherry Duhe. Newcrest is waiting to hear from Newmont on whether it will take up that offer, she told reporters.

The information could include private details about Newcrest's long-run growth projects, Ms. Duhe said, declining to elaborate further.

"The onus of the merger now returns to [Newmont] and finding a sufficient premium for [Newcrest] which also satisfies its own shareholders," RBC Capital Markets analyst Alex Barkley said.

Some analysts said the American company's interest in Newcrest could flush out competing bids for some or all of Newcrest's operations. The company runs mines in Australia, Canada and Papua New Guinea.

Another gold-mining giant, Barrick Gold Corp., has signaled it isn't interested in bidding for Newcrest. Chief Executive Mark Bristow on Wednesday said he won't pursue deals to simply grow Barrick's scale.

"I believe our shareholders wouldn't like that either," he told analysts on a call.

Ms. Duhe said the Australian company is seeking to reserve its rights by asking to talk on a nonexclusive basis. "There is nothing that has occurred that would warrant us saying anything public about any other conversations with any other companies on any matters, whatsoever," she said.

Newcrest on Thursday reported a 2% decline in first-half net profit but said underlying earnings increased. The company surprised investors with a special dividend that Newcrest said came from the early repayment of a credit facility by Canada's Lundin Gold Inc., in which Newcrest holds a stake.

The approach by Newmont illustrates how gold producers are seeking to do deals at a time when the industry is struggling to make large new discoveries of the precious metal. In 2019, Newmont acquired Canadian gold producer Goldcorp Inc. in a transaction valued at $10 billion. That same year, Newmont and rival Barrick Gold formed a joint venture in Nevada to cut costs, after an earlier offer from Barrick to buy Newmont was rejected.

Newcrest's network of low-cost mines have some of the longest lives in the industry globally. The company's assets can run for 22 years before becoming depleted, well above most of its listed rivals, said analysts at Barrenjoey, an Australian investment bank. The miner also produces copper, an industrial metal in demand among investors because of its heavy use in electric vehicles and renewable-energy infrastructure.

Newmont's approach comes amid an upheaval at Newcrest, which in December said Sandeep Biswas will leave the company after eight years as chief executive. Newcrest named Ms. Duhe, its former chief financial officer, as interim CEO while it searched for Mr. Biswas's successor.

Ms. Duhe said the search for a permanent chief executive is continuing.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

February 16, 2023 00:41 ET (05:41 GMT)

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