Newmont said to be mulling sweetened bid for Newcrest

Brucejack gold-silver mine is located about 940 km north of Vancouver, B.C. (Image courtesy of Newcrest Mining.)

Newmont Mining (NYSE: NEM)(TSX: NGT), the world’s largest gold producer, may be preparing a sweetened takeover offer for Newcrest Mining (ASX, TSX: NCM), which rejected the miner’s unsolicited bid six weeks ago.

Speculation on a potential deal, originally estimated at $17 billion, comes as Newmont reportedly gained partial access to its Australian rival’s corporate books.

Anonymous sources who spoke to Bloomberg News on Wednesday said the fact that Newmont was undertaking limited due diligence on Newcrest signed that the US company could make a revised offer to seal a takeover deal.

A spokesperson for Newmont confirmed the company has been engaged with Newcrest’s management in relation to their provision of limited, non-public information on for due diligence purposes.

“We’re not able to provide further details at this time, but as always we will continue to be disciplined as we evaluate all of our options, and are committed to acting in the best interests of our shareholders and other stakeholders,” he told MINING.COM.

While initial feedback from analysts and shareholders suggested that Newmont will have to improve its bid, experts now see few options for Newcrest, with no obvious alternative buyers to challenge Newmont’s.

Barrick Gold (TSX:ABX)(NYSE:GOLD), the world’s no. 2 bullion producer, has said it doesn’t plan to make a rival offer and Agnico Eagle Mines (TSX, NYSE: AEM), the third-largest gold miner, is busy wrapping up a deal with Pan American Silver (TSX, NASDAQ: PAAS) to jointly acquire Yamana Gold (TSX: YRI; NYSE: AUY; LSE: AUY).

If successful, the Newmont-Newcrest tie-up would be one of the biggest in Australian history, as the target company is the country’s no.1 gold producer.

It would also increase Newmont’s footprint in high-demanded copper, as prices have soared recently due to its use in renewable energy and electric vehicles.

Agreeing on a price tag that satisfies both sides could stretch negotiations over several weeks or months, Sprott Asset Management’s Douglas Groh told Bloomberg News on Wednesday.

“I think a deal is inevitable,” Groh said, adding it’s obvious to the market there’ is a lack of leadership at Newcrest. The company’s chief executive officer surprised investors in December by abruptly leaving the post

Newcrest currently operates the large open-pit and underground Telfer mine in Western Australia’s Pilbara region and is the top gold producer in British Columbia, Canada since the 2019 acquisition of the Red Chris copper and gold mine.

Last year, the company expanded its footprint in Canada with the takeover of Pretium Resources, which handed it the Brucejack gold mine.

The company also owns the Lihir gold mine and 50% of the Wafi-Golpu project, both in Papua New Guinea. The other half is owned by Harmony Gold.