Gold mining heavyweight AngloGold Ashanti (NYSE:AU) has struck a £1.9 billion ($3.74 billion) cash and stock deal to acquire fellow gold producer Centamin (LSE:CEY), which owns Egypt’s largest and first modern gold mine.
Following the news, Centamin shares jumped over 26% to an intra-day high of just under £1.51 a share.
AngloGold is offering 0.06983 shares and US$0.125 ($0.195) in cash, valuing Centamin at £1.63 per share based on the closing price of US$28.80 per AngloGold share on 9 September and a £:US$ exchange rate of £1:US$1.3080.
The offer price is a 36.7% premium to the closing price of Centamin shares on 9 September, and a 37.6% premium to the 30-day volume-weighted average price.
AngloGold is also honouring the promised dividend payment of US$0.0225 per Centamin share for the six-month period ended 30 June 2024. The dividend will be paid on 27 September.
Both boards are recommending the acquisition, which will give AngloGold control of the Egypt-based Sukari gold mine, which has produced over 5.9 million ounces of gold since it came online in 2009, and is one of the world’s largest mines.
Once completed, the acquisition will boost AngloGold’s annual production from around 450,000 ounces to over 3 million ounces.
AngloGold, which has a market capitalisation of US$11.52 billion, says it will also immediately reduce the miner’s total cash and all-in sustaining costs (AISC).
Sukari, which sits within the emerging Arabian Nubian Shield, had a total cash cost of US$715 per ounce and AISC of US$1,290 per ounce for the first two months of Q3 2024. The mine produced 93,278 ounces and sold 102,563 ounces at an average realised gold price of US$2,420 per ounce.
AngloGold’s portfolio of projects spans Australia, Argentina, Brazil, Colombia, the US, Ghana, Guinea, Tanzania and the Democratic Republic of the Congo.
AngloGold Chair Jochen Tilk says the acquisition adds to the company’s portfolio the “pre-eminent gold producer in Egypt, and offers enormous geological potential” that the company is very well placed to develop.
CEO Alberto Calderon says the transaction will be free cash flow accretive in the first full year of production and net asset value accretive from day one.
“It will also offer additional upsides as we leverage our corporate infrastructure and our core competencies in exploration, operations, and asset optimisation,” he says.
Centamin Chair James Rutherford says the board believes that the strategic merits of the transaction are compelling and that the terms offer Centamin shareholders participation in the continued growth of the company’s operations under the stewardship of AngloGold.
“Our board is confident that the commitments given by AngloGold Ashanti will result in the continued support for our operations, communities, and our talented and committed people,” he says.
“Therefore, the Centamin board intends to unanimously recommend this transaction to Centamin shareholders.”
Centamin was advised on the financial terms of the deal by Merrill Lynch International and BMO Capital Markets, which have concluded the terms of the transaction are “fair and reasonable”.
Write to Angela East at Mining.com.au
Images: Centamin
