Lihir Gold Looks for Improved Offer from Newcrest Mining

Submitted by Jim Thesiger on 6 April, 2010 - 04:46

The Australia based gold exploration, mining and processing company Lihir Gold Limited (LGL), has claimed that some of the major shareholders of the company expressed their support after the company turned down the all-scrip takeover bid of Newcrest Mining (NCM), which increases the possibility of an improved offer. After getting its $9.2 billion worth of offer rejected, Newcrest is now planning to discuss the issue with its major shareholders in order to determine the next step. As Lihir Gold and Newcrest Mining shares their main shareholders, those who are backing Lihir are likely to include some of those advising the Melbourne based bidder. Lihir Gold stated on Monday that some of the major shareholders of the gold company believe the Newcrest offer was not adequate and the company needs to improve its bid. However, the source didn’t come up with the names of those investors.

In a statement, Newcrest included that although an agreement with Lihir Gold can be profitable but it is not an essential one. However, no indication was provided by the company whether its offer for the Lihir shares was the final one. It is to be mentioned that Newcrest asked for nine Lihir share in exchange of each Newcrest share in its offer. According to a spokeswoman of Newcrest, the offer will remain on the table and the miner will discuss the issue with its investors over the next one and a half week.

BlackRock, Colonial First State and Fidelity- the top three shareholders of Newcrest are the top three shareholders of Lihir as well as they own 35 percent of Lihir Gold and 39 percent of Newcrest. However, convincing Lihir to accept the Newcrest offer may turn out to be more beneficial for these investors due to the fact that their holdings in Newcrest worth more in comparison with the stakes they have in Lihir. Newcrest shares closed the week at $33.78 on Thursday valuing the Lihir bid at as much as $3.75 per share. On the other hand, Lihir shares reached $4.04- a two year high, an indication that the market is looking forward for a better offer.