Newcrest Bulks Up With $2.8 Billion Gold Deal to Add Canada’s Pretium

(Bloomberg) -- Newcrest Mining Ltd. agreed to buy Pretium Resources Inc. in a cash and shares deal valuing the Canadian gold producer at about $2.8 billion, adding to a wave of consolidation in the sector.

Melbourne-based Newcrest will offer Pretium holders C$18.50 ($14.87) a share, a 23% premium to the target’s closing price Monday in Toronto. Pretium’s board has unanimously recommended the transaction, although it still requires the approval of two-thirds of the company’s shareholders.   

“Our strategy is to specialize in low-cost, long-life and large-scale gold mines, and this is certainly that,” Sandeep Biswas, Newcrest’s managing director and chief executive officer, said on a media call. Adding Pretium, which owns the Brucejack operation close to Newcrest’s Red Chris mine in British Columbia, would immediately add more than 300,000 ounces a year of gold output, the company said, taking annual production to more than 2 million ounces. 

The acquisition would expand Newcrest’s footprint in the highly prospective Golden Triangle region of British Columbia, Biswas said, making the company the biggest gold producer in the province. “The really exciting thing is the expansion potential. We believe there’s a lot more gold there.”

Newcrest, which already owns a 4.8% shareholding in Pretium, last year added a new listing on the Toronto Stock Exchange to support efforts to extend its exposure to projects in the Americas, and previously flagged plans to pursue further acquisitions -- including in Canada. Under the proposal, Pretium holders can also opt to receive 0.8084 Newcrest shares per Pretium share, or a combination of cash and shares.

Merger and acquisition activity in the gold sector has gathered pace in recent months. In September, Agnico Eagle Mines Ltd. and Kirkland Lake Gold Ltd. announced a “merger of equals” valued at about C$13.4 billion, while AngloGold Ashanti Ltd., the world’s No. 3 gold miner, agreed to buy the 80.5% of Corvus Gold’s stock it didn’t already own to boost its exposure to development assets in Nevada. Gold Fields Ltd. is looking to acquire assets to replace its depleting mines, CEO Chris Griffith said in an interview in August. 

“This is about getting into a Tier 1 jurisdiction with exploration upside and bringing our technical expertise to join with Pretium’s to generate differential value -- that’s the lens through which we look at acquisitions,” Biswas said. 

Newcrest shares fell as much as 5.1% in Sydney following the announcement, which came after Monday’s close in Toronto. The company, which in August reported a record annual profit, has seen its shares slip 3.3% so far this year, outperforming a near 4% drop in spot gold.  

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