Newcrest Mining to Buy Pretium Resources (ASX:NCM)

Newcrest Mining to Buy Pretium Resources (ASX:NCM)

The Newcrest Mining Ltd [ASX:NCM] share price is down slightly today after announcing they’ll be buying Pretium Resources.

Pretium is a Canadian company double listed on the TSX and the NYSE. It owns Brucejack, an underground mine around 950km north-west of Vancouver, Canada. Located in the Golden Triangle of British Columbia, Brucejack began commercial production in July 2017.

Newcrest is one of the world’s largest gold miners with operations in Western Australia, NSW, Papua New Guinea, and Canada. Brucejack is also about 140km southwest of Newcrest’s 70% owned and operated Red Chris Mine.

What’s the deal for the Newcrest share price?

Newcrest will be paying around US$2.8 billion for Pretium. Pretium shareholders can choose between either CA$18.50 a share in cash, which is 22.5% more than Pretium’s last closing price on 8 November or 0.804 Newcrest shares per each Pretium share held.

If the deal goes through — it still needs shareholder approval — Newcrest becomes the sole owner of Brucejack.

Newcrest’s Managing Director and Chief Executive Officer Sandeep Biswas said:

Brucejack is a Tier 1 mine in a Tier 1 jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long life, low cost portfolio. Following this transaction Newcrest will have exposure to six Tier 1 orebodies and a portfolio of organic growth options of unrivalled quality. The transaction will also drive a material increase in Mineral Resources, Ore Reserves and annual gold production.

The combination of Newcrest and Pretivm will create the leading gold miner in British Columbia’s Golden Triangle, operating both the Brucejack and Red Chris mines.

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The acquisition would increase Newcrest’s gold production by 15%

 In 2020, Brucejack produced 348,000 ounces of gold at an all-in sustaining cost (AISC) of US$981 per ounce.

In one stroke, the deal increases Newcrest’s gold production by around 15% a year to more than two million ounces. Brucejack is expected to produce around 311,000 ounces per year during its 13-year mine life.

Shares for Newcrest Mining are down today close to 1% after the announcement and trading at $25.12 a share.

If you are interested in investing in gold check out our report ‘How to Buy and Store Real Gold in Australia in 2021’, where Editor Brian Chu spills all his gold investment secrets.

 

You can access it here.

 

Best,

 Selva Freigedo

The Daily Reckoning Australia

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