Newmont Is Said to Near $20 Billion Deal for Newcrest

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(Bloomberg) — Newmont Corp. is nearing a deal to acquire Newcrest Mining Ltd. for about A$29.4 billion ($19.5 billion), according to people familiar with the matter, creating the world’s biggest gold miner.

The companies are in the final stages of negotiations and may announce an agreement on a binding offer for the Melbourne-based firm as soon as in the coming days, according to the people, who asked not to be identified as they were not authorized to speak publicly. Newcrest agreed to extend the US gold giant’s due-diligence rights to May 18 after an earlier deadline lapsed, it said Thursday.

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While talks are advanced, they may still fall apart at the last minute, the people cautioned. A representative for Newmont didn’t immediately respond to requests for comment by phone, text and email, while Newcrest declined to comment.

A deal would likely mark the apogee of a furious five-year consolidation among the world’s largest gold miners that began with Barrick Gold Corp.’s $18 billion pursuit of Randgold Resources Ltd. and includes a $5.2 billion takeover of Yamana Gold Inc. that was completed in March. Newmont’s proposal comes just weeks after the spot trading price of bullion approached an all-time record amid a global stagflation watch.

Newmont first approached its Australian rival in February with a $17 billion non-binding bid that was rejected by Newcrest’s board. The US company sweetened that in April to $19.5 billion, and described it as the best and final offer. Newcrest Chief Executive Officer Sherry Duhe said the board was prepared to recommend the proposal to its shareholders, subject to successful due diligence. 

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Gold miners worldwide are facing the prospect of stagnating production, harder-to-mine deposits and rising input costs. Such industry challenges are seen as a catalyst for more mergers and acquisitions, as companies seek to increase size to boost production and improve efficiencies through economies of scale.

It’s not just Newcrest’s five gold mines across three continents that are attracting Newmont, as the Australian company generates around a quarter of its revenue from copper. Newmont, in turn, is facing a decade-long gold rut and has said it wants more of the energy-transition metal in its portfolio.

—With assistance from Jason Scott.

(Corrects status of Yamana Gold takeover in fourth paragraph.)