Newcrest-Lihir Looking Forward to Form Mining Giant

Submitted by Jim Thesiger on 4 May, 2010 - 14:38

One of the largest Australia based gold miner Lihir Gold Limited (LGL) has finally endorsed the takeover bid of its rival Newcrest Mining (NCM), after the company raised the offer to $9.5 billion in an attempt to build the fourth largest listed gold mining company of the world. However, Lihir declared that it will continue to talk with the other bidders as well. In a join statement, Lihir and Newcrest stated that they will enter into a merger implementation agreement something that will allow Lihir to continue talks with the other parties till 8th of June. It is to be mentioned that the recent boost in the gold price has turned both Lihir Gold and Newcrest Mining to become prospective targets of takeover for the offshore major players of this industry who are looking forward for a replacement of reserves. It is assumed that companies like Anglo American, Barrick Gold and Newmont Mining may intervene into the possible Lihir takeover by Newcrest.

Currently Newcrest is looking for 8.43 Lihir shares for each Newcrest share. In addition to this they are offering 22.5 cents cash for each Lihir shares, less any interim dividend paid. According to Newcrest, the latest bid improved its previous offer by as much as 6.4 percent. In the initial offer Newcrest asked for nine Lihir shares in exchange of each Newcrest share plus 22.5 cent per share- an offer that Lihir turned down. Don Mercer, the chairman of Newcrest claimed that, the organization will become one of the leading gold producers of the Asia-Pacific region if the takeover is successful and will be able to operate with a higher margin.

Ross Garnaut, the chairman of Lihir Gold stated that combining the two miners would be strategically logical. He expressed his satisfaction for being able to secure a better offer from Newcrest. Mr. Garnaut also added that the new proposal will allow the Lihir investors to receive very attractive premiums and they will be able to enjoy the benefits generated by combined group by obtaining the Newcrest shares.