Lihir takes Newcrest offer to next stage

Finance

Publishing Date: 08 Jun 2010 11:33am GMT
Author: Mining Journal

Newcrest Mining Ltd and Lihir Gold Ltd have entered into an “exclusivity period” following the completion of due diligence in regards to a merger between the two companies.

The agreement requires Lihir to work exclusively with Newcrest and cease talks with third parties as Australia’s two largest gold miners work towards forming a partnership worth A$25 billion (US$20.4 billion).

Under the deal, Newcrest is offering one share for every 8.43 Lihir shares, plus cash of A$0.225/share. The initial offer (one Newcrest share for every nine Lihir shares) was rejected by Lihir in April.

Both companies have scheduled to hold scheme meetings in August, and expect the merger to be completed in September.

Lihir’s directors have recommended shareholders vote in favour of the merger, saying it “welcomes Newcrest’s commitment to the proposed merger, which will create an attractive gold company with operations in five countries and strong growth opportunities”.

Newcrest said it believed the merger has compelling strategic logic and merit. “It would rank as the fourth-largest gold producer in the world by market capitalisation with cash costs in the industry’s lowest quartile,” Newcrest said.