• Barrick boss Mark Bristow waved off suggestions the Canadian gold giant could wade into a bidding war over Aussie gold miner Newcrest
  • Major Newcrest investor would “happily vote against” a potential transaction on current terms, which value NCM at $24.5b
  • Coal stocks lift on thermal price rise

The inimitable boss of Canadian gold giant Barrick, Mark Bristow, has launched a stinging rebuke of its US rival Newmont’s $24.5 billion bid for Australia’s largest gold producer Newcrest Mining (ASX:NCM).

Bristow came into the role as CEO of the world’s number two gold miner in a merger with his African focused gold miner Randgold, and was a key player in the arms race between the two behemoths which included Barrick’s launch of a hostile bid for Newmont in 2019.

He also initiated the resettling of Kalgoorlie’s Super Pit in Australian hands after finally sealing a deal to sell its portion of the mine to Saracen Mineral Holdings, later consumed into a merger with co-owned Northern Star (ASX:NST).

Presenting at the Mining Indaba conference in Cape Town yesterday, Bristow told reporters the deal “doesn’t make sense right now” adding “growing bigger for the sake of growing bigger is not a strategy”.

If any investors uncharmed by Newmont’s 0.38 for 1 share offer were hoping for a bidding war it seems like they’re not getting it.

Yesterday RBC analyst Alex Barkley noted Newmont, which formed Newcrest as its own local subsidiary in 1966 and exited its investment in the early 1990s, was the most logical buyer.

Canadian miner Agnico Eagle is the next rung down on the ladder from Newmont and Barrick, but already completed a major marriage with Kirkland Lake Gold last year and has its hands full with the Canadian assets of Yamana Gold after beating Gold Fields to the US$4.8 billion deal in a combined offer with Pan American Silver.

Newcrest shares are in limbo today, up ever so slightly to $24.55 after a 9.3% lift yesterday.

6Mozpa Newmont’s indicative proposal came in at a relative value of $27.16 per share, a 21% premium on Newcrest’s pre-bid closing price on Friday.


Happy to vote against

One of Newcrest’s largest shareholders with a 7.4% stake is Australian fund Allan Gray.

Its senior investment officer Simon Mawhinney said it was too early to devote much attention to the not yet formal offer but that in its current form Allan Gray would “happily vote against the transaction.”

“A tie up only makes sense, in my opinion, in as far as Newcrest shares are attractively priced,” he told Stockhead

“It’s always nice to buy things that are cheap, everyone does this and feels this way in their everyday life. There’s nothing different when you’re buying companies.

“But just because there is the prospect of a deal does not mean that a deal needs to be consummated. I think Newcrest’s strategy, with the right focus, is a reasonable standalone journey which we’re happy to invest alongside.”

Newmont’s share price has risen at triple the rate of Newcrest’s over the past five years, opening a big valuation gap between the miners.

Any deal would give Newmont control over four of Australia’s largest gold mines, including the bulk, low cost and copper rich Cadia mine in New South Wales.

Whether it would be as enamoured with more troublesome assets in Newcrest’s 2.1-2.4Moz portfolio like the Lihir mine and stalled Wafi-Golpu development in PNG, Red Chris in Canada and Telfer in WA, remains to be seen.

Most deals of this size involve some rationalisation (i.e. asset sales) after the fact to separate so-called Tier-1 assets from the dregs.

But that has created opportunities in the past, with Northern Star and Evolution Mining (ASX:EVN) growing fatter and happier by devouring cast-offs from Barrick and Newmont’s stables after the gold market’s 2013 crash.


And what happened on the market this fine morn?

Coal miners were in fine form, with Whitehaven (ASX:WHC), New Hope (ASX:NHC) and Yancoal (ASX:YAL) all up more than 4.5%.

With wet weather hurting supplies, front month Newcastle coal futures rose 6.78% yesterday to US$252/t after weeks of hits.

The materials sector was more muted, up 0.2% with South32 (ASX:S32) and Fortescue (ASX:FMG) both up strongly but Rio Tinto (ASX:RIO) and BHP (ASX:BHP) indifferent.


Ground Breakers share price today: