Barrick rules out competing bid for Australia’s Newcrest – Bloomberg

MELBOURNE (Reuters) – Barrick Gold has ruled out a counter-bid for Australia’s number one gold producer, Newcrest Mining, its chief executive has told Bloomberg, eliminating the most likely prospect of a rival for bidder Newmont.

But another alternative for Newcrest would be to add value by selling assets, analysts said.

Newmont, the world’s largest gold producer, on Monday bid $16.9 billion for Newcrest, whose operations include the world-class Cadia asset in Australia and a growing presence in North America, Papua New Guinea and Ecuador. It also has potential for growth in copper.

Amid broad sector consolidation, US-based Newmont’s bid could trigger bids from competing gold producers. But none would come from Barrick, the second largest in the world, the Canada-based company’s CEO Mark Bristow told Bloomberg.

“There’s a difference between value merger acquisitions and getting bigger for the sake of getting bigger,” Bristow said in Monday’s interview.

Newcrest has alternatives to a Newmont takeover, said analyst Dan Morgan of Sydney-based investment bank Barrenjoey.

“Self-help is the best help,” Morgan said.

Newcrest should better articulate the value of its long-lived growth projects and perhaps adjust its portfolio, he said.

These could include the sale of the relatively modest Havieron gold mine in Australia and the nearby Telfer mine and processing plant, which is operating well below capacity.

Newcrest could also sell its 32% stake in Canada’s Lundin Gold and the Lihir mine in Papua New Guinea, which uses deep-sea waste disposal and therefore doesn’t fit some investors’ environmental mandates, he said.

“Why not liquidate that, then the rest of the portfolio would be more attractive for investors and acquirers?”

Other analysts said the most obvious potential buyer for Havieron is its minority shareholder Greatland Gold, which plans to list on the Australian Stock Exchange this year.

Greatland Gold declined to comment.

A source told Reuters Monday that Newmont was willing to slightly increase its $16.9 billion bid.

Analysts say Newcrest investors would expect a 10 percent improvement in terms or cash, reflecting strong growth projects.

Goldman Sachs’ hedge fund desk said Monday it sees only a limited chance Newmont could improve its bid by more than 5%.

A fall in Newmont shares would lower the offer price, which would lower the premium and make it more difficult for Newcrest’s board to recommend the deal, it said. Shares of Newmont fell nearly 5% on Monday.

“This is the biggest risk associated with the deal,” it noted.

For Australian investors, Newmont could also sweeten the deal, as it has $440 million in postage (tax) credits, Jefferies said in a note.

Shares in Newcrest, which is due to report half-year results on February 16, ended up 1.7% at A$24.95 on Tuesday. Newmont’s implied asking price is $27.16.

(Reporting by Melanie Burton; Editing by Kim Coghill and Bradley Perrett)

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