What was a quiet start to the gold company mergers and acquisitions (M&A) market in 2023 suddenly exploded in February with the US$17B bid by Newmont for Newcrest.
Analysts are viewing the proposed deal as a sign of a big gold M&A rebound after activity was low in 2022.
Leading independent law firm Corrs Chambers Westgarth recently reported that metals and mining was the most dominant sector for M&A deals in 2022 comprising 32% of deals, in the survey period compared to 13% the previous year.
Of the 18 deals in the metals and mining sector, 77.8% (14 deals) were in the gold sector, with gold-related M&A comprising a huge 25% of all deals in 2022.
S&P Global also recently reported that big-ticket M&A activity was off to a slow start in 2023 as the regulatory environment made executing large deals more challenging.
It noted that no global deals announced in January had a transaction value that reached US$10B. This marked the fourth calendar month since the start of 2022 that ended without an M&A deal surpassing that threshold, according to S&P Global Market Intelligence data.
However, the unsolicited Newmont offer for Australia’s Newcrest in February provided signs that the thaw is starting to break.
Under the indicative proposal, Newmont would acquire 100% of the issued shares of Newcrest by way of a scheme of arrangement, for 0.380 Newmont shares for each Newcrest share held.
There is still a long way to go with Newmont’s takeover bid, with most analysts suggesting the US company will need to raise the stakes.
The Newmont bid seemed to rejuvenate gold M&A activity with a number of takeover bids launched soon after
Newcrest’s board has already rejected the initial indicative proposal and unanimously determined to reject the offer as it believes the offer does not represent sufficient value for Newcrest shareholders.
To determine if Newmont can provide an improved proposal for consideration by the board that appropriately reflects the value of Newcrest, the board has indicated to Newmont that it is prepared to provide access to limited, non-public information on a non-exclusive basis.
The provision of this information is subject to certain conditions including signing of an appropriate non-disclosure agreement.
Newcrest has engaged J.P. Morgan and Gresham Advisory Partners as its financial advisers and Herbert Smith Freehills as its legal adviser.
The release of the Newmont bid seemed to rejuvenate gold M&A activity with a number of takeover bids launched soon after.
B2 Gold
In mid-February, TSX-listed B2Gold Corp. (TSX: BTO) announced that it and Sabina Gold & Silver Corp had entered into a definitive agreement pursuant to which B2Gold has agreed to acquire all of the issued and outstanding shares of Sabina.
The transaction will result in B2Gold acquiring Sabina’s 100% owned Back River Gold District located in Nunavut, Canada. The Back River Gold District consists of five mineral claims blocks along an 80km belt.
The most advanced project in the district, Goose, is fully permitted, construction ready, and has been de-risked with significant infrastructure currently in place. B2Gold has strong northern construction expertise and experience to deliver the fully permitted Goose project and the financial resources to develop the significant gold resource endowment at the Back River Gold District into a large, long life mining complex.
Under the terms of the transaction, a total equity value of approximately C$1.1B was estimated for Sabina. B2Gold currently has three operating gold mines in Mali, the Philippines and Namibia, as well as various exploration and development projects in other countries.
Pantoro and Tulla join forces
Elsewhere, Pantoro and Tulla Resources agreed to join forces to create a A$400M company.
Both companies own 50% each of the 4.8Moz Norseman gold project in Western Australia.
The merger will create a new mid-cap ASX-listed gold company with target production of 110,000Moz pa, a mineral resource of 4.79Moz and an ore reserve of 0.98Moz and, given the scale of the Norseman project, significant potential to grow the resource base and production profile through greenfields and brownfields exploration.
The merger is unanimously recommended by the Boards of Tulla and Pantoro.
In support of the merger, Pantoro is launching a two-tranche institutional placement of new fully paid ordinary shares in the company to sophisticated and professional investors, to raise A$75M.
“Consolidating the Norseman Gold Project into a single entity is a logical step for all parties to maximize value as the project ramps up to reach its full potential as a premier gold asset in Western Australia,” Pantoro managing director, Paul Cmrlec, said.
“The equity raising ensures that the combined group is well funded through the initial phases of production and enables the reduction of the consolidated debt position of the company during this critical phase.”
“We look forward to working with our proposed new board members and thank our proposed outgoing directors for the dedicated service and guidance to management of the company through the very challenging environment of the past three years in particular.”
Catalyst Metals and Superior Gold
In late February, Superior Gold Inc. (TSXV: SGI) announced that it had entered into a definitive agreement pursuant to which Catalyst Metals Limited (ASX: CYL) will acquire all the issued and outstanding common shares of Superior pursuant to a court-approved plan of arrangement.
The transaction will result in Catalyst acquiring 100% of Superior’s Plutonic Gold Operations, located in Western Australia. The Plutonic Gold Operations include the Plutonic underground gold mine and central mill, numerous open-pit projects, and an interest in the Bryah Basin joint venture.
Under the terms of the transaction, rates Superior with a total equity value of approximately C$54M.
Upon completion of the proposed transaction, existing Catalyst shareholders and former Superior shareholders will own approximately 78% and 22% of the combined company respectively, including the impact of the previously announced acquisition of Vango Mining Limited by Catalyst but excluding the impact of the planned Catalyst financing, as further described below.
“We are very pleased to offer shareholders the opportunity we have always proposed, the consolidation of the Plutonic-Marymia gold belt, with a meaningful immediate premium, diversification of assets and cash flow and logically, a listing on the ASX,” Superior CEO and president, Chris Jordaan, said.
Top M&A specialists named
A recent GlobalData study found that Paul, Weiss, Rifkind, Wharton & Garrison, and Fasken Martineau DuMoulin were the top mergers and acquisitions (M&A) legal advisers in the metals and mining sector for 2022 by value and volume.
Based on its Financial Deals Database, GlobalData revealed that Paul, Weiss, Rifkind, Wharton & Garrison achieved its leading position in terms of value by advising on US$10B worth of deals. Meanwhile, Fasken Martineau DuMoulin led by volume by advising on a total of 15 deals.
Blake Cassels & Graydon occupied the second position in terms of volume with 11 deals, followed by Cassels Brock & Blackwell with 10 deals, Dorsey & Whitney with five deals, and McCarthy Tetrault with four deals.
