Newcrest Mining Ltd, the third-biggest gold producer by market value, agreed to a US$806.5 million deal to control an Imperial Metals Corp mine in Canada, extending the spree of deal-making in the sector.
Melbourne-based Newcrest, with assets in Australia, Indonesia and Papua New Guinea, would acquire a 70 percent joint-venture interest in the Red Chris copper and gold mine in British Columbia and become the operator of the site, the producer said yesterday in a statement.
Newcrest’s move into Canada comes in the middle of a bout of consolidation in the gold industry, as the largest producers seek to increase the quality of their portfolios, boost reserves of the precious metal or win operational savings.
Photo: AP
Australia’s top gold producer remains in a strong position to complete further deals and would continue to review opportunities, chief executive officer Sandeep Biswas said by telephone.
Red Chris, on the northern edge of the Skeena Mountains, about 1,700km north of Vancouver, gives Newcrest a producing asset in North America and has significant underground development opportunities.
“It’s a modest operating asset at the moment — the real attraction for us is the size of orebody,” Biswas said. “It’s a multi-decade life potential mine, so that plays right into our portfolio of multi-decade operations. It’s got the potential of significant size.”
Newcrest shares closed at A$25.43 yesterday in Sydney trading. They have gained 15 percent this year.
A study of the Red Chris site last year suggested that the use of block cave mining would offer access to deep lying copper and gold mineralization. Newcrest uses the technique at its operation in Cadia, Australia, and is regarded as the industry’s specialist in the method.
“That’s where our wheelhouse is — this is tailor-made for Newcrest,” Biswas said. “That’s why we think we can add a tremendous amount of value to this opportunity and turn it into a tier-one orebody.”
Red Chris has estimated resources of 20 million ounces of gold and 13 billion pounds of copper, according to Newcrest. The producer had previously set a deadline for the end of 2020 to increase its exposure from four to five so-called tier-one assets — the industry’s highest quality mines.
Barrick Gold Corp last week said that it plans to proceed with a formal takeover offer for Newmont Mining Corp, undeterred by a rebuff from its largest rival.
In January, Newmont agreed to buy Goldcorp Inc in an all-stock deal valued at US$10 billion, while Barrick last year struck a US$5.4 billion acquisition of Randgold Resources Ltd.
Newcrest would be open to examining the proposed sales of assets in Australia if Barrick is successful in its hostile approach to acquire Newmont, Biswas said.
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