SYDNEY (Commodity Online): It is the time for mergers and acquisitions in the mining sector. After the recent copper miner Vedanta's takeover of Cairn India, now two gold mining majors in Australia announced their merger on Tuesday.
According media reports, Australian gold miner Newcrest bought rival Lihir Gold with the deal creating the fourth largest group in the sector.
Newcrest said Lihir Gold shareholders voted overwhelmingly in favour of the 9.5 billion Australian dollar deal, with just under 100 per cent of the votes cast in support.
Newcrest chairman Don Mercer said in a statement on the company's website that the merger would create one of the world's great gold mining companies with an outstanding platform to deliver superior returns to shareholders.
The combined entity will be the fourth largest gold company in the world by market capitalization. The deal now goes for approval to court in Papua New Guinea, where the merged entity will continue to be traded on the local stock exchange. The new group is estimated to be worth some 25 billion Australian dollars.
Newcrest launched its offer in April but had to improve the terms to get it accepted by Lihir shareholders.
Newcrest also reported that sales revenues rose 10.7 per cent to $2.80 billion, from $2.53bn the previous financial year. Gold makes up 75 per cent of Newcrest's revenue, and this will increase after the takeover of Lihir.
The company said the average price for gold sold during 2009-10 was $1252 per ounce, 7.1 per cent higher than the previous year.
The gold giant also released an increase in its resources and reserves and said it would continue to focus on growth through further exploration. It said that gold reserves increased 11 per cent to 47.3 million ounces and copper reserves increased 69 per cent to 7.88 million tonnes.
Goldman Sachs analysts said the additions to the resource and reserve statement this year were a clear indication of the abundance of organic growth options open to Newcrest.
Newcrest also outlined that gold production of 1.76 million ounces was up 8 per cent on 2008-09 output, with record production at its Telfer mine.