Newcrest Mining Limited (NCM) today confirmed that it approached the Board of Lihir Gold Limited (LGL) with a proposal to combine the two companies to create the world’s fourth largest gold company, with a portfolio of low cost, long life, high margin assets. The proposal put to the Lihir Board was for a scrip and cash transaction at a fixed ratio of one Newcrest ordinary share for every 9.0 ordinary shares in Lihir plus A$0.225 cash per Lihir share, inclusive of any interim dividend declared by Lihir for the half year ending 30 June 2010, through a scheme of arrangement. Newcrest believes that the Proposal would be compelling for Lihir shareholders and represents full and fair value for Lihir shareholders.
The Proposal, dated 29 March 2010, follows an initial approach to Lihir on 15 February 2010, and represents: a 35% premium to Newcrest and Lihir’s closing share prices on 12 February 2010, the last trading day prior to Newcrest’s approach in February; a 31% premium based on Newcrest and Lihir’s 1 month VWAP to 29 March 2010; a 32% premium based on Newcrest and Lihir’s 3 month VWAP to 29 March 2010., and a 12% increase from the earlier proposal of 15 February 2010. The Proposal would result in Lihir shareholders owning approximately 35% of the combined organisation, and sharing in the benefits of the combination.
In addition to the highly attractive premium, Newcrest believes the Proposal would provide significant value for Lihir shareholders through exposure to Newcrest scrip, and consequently participating in: Asia-Pacific’s leading gold producer, with a standout portfolio of long life, high margin, tier one gold assets; a more diversified asset and geographic profile; a combined organisation in the lowest quartile of cash costs globally; a stronger and more diversified organic growth portfolio; a powerful financial position from which to invest in future growth and development; estimated potential synergies to a combined organisation of A$85m p.a. pre –tax; and further longer term upside through sharing of highly complementary skills. he combined organisation would create a standout portfolio of long-life, low-cost, tier-one gold assets. It would have an enviable selection of brownfield and larger greenfield growth options. Backed by a pro-forma market capitalisation of around A$24.5 billion and minimal net debt of A$200 million, the combined company would have a powerful platform to deliver superior financial performance and to capture and deliver future growth for shareholders.
