Centamin will become the latest mining firm to leave London’s stock exchange after agreeing to be taken over by an American competitor.
The group has recommended that AngloGold Ashanti pay $2.5 billion in cash and shares to gain control of Egypt’s biggest goldmine.
AngloGold (which is also listed in Johannesburg) made an offer valuing FTSE 250 shares at 163p per share, a 36.7% premium over the Monday closing price. Centamin shareholders will receive 0.06983 AngloGold shares and $0.125 cash for every Centamin share. Centamin shares closed at 146.90p yesterday, up 27 1/2p or 22.9%, valued at PS1.7 billion. AngloGold shares in New York closed Tuesday night at $27.44, down $1.36 or 4.7%.
Centamin’s main asset is the Sukari goldmine, located in Egypt’s Eastern Desert. It also has projects in Ivory Coast. Sukari’s gold production has topped 5.9 million ounces since its start in 2009. James Rutherford (65), Centamin chairman, described the deal as “an endorsement” of Centamin’s success in re-establishing Sukari to a world-class operation.
AngloGold says the increased purchasing power of the combined group will help reduce the cost of supply for the Sukari Mine in Egypt’s Eastern Desert
In 2018, Randgold, a Canadian company, merged with Barrick Gold in an all-share transaction worth $18,3 billion.
Rutherford stated that “the Centamin Board believes that the strategic merits are compelling, and that the conditions offer Centamin shareholder participation in the growth of our operations,” under AngloGold’s stewardship. The combined group will be 16.4% owned by Centamin shareholders. The deal will be voted on next month.
AngloGold has a value of 11.3 billion dollars and operates projects in Tanzania as well as the Democratic Republic of Congo (DRC), Ghana, Guinea, Australia. The United States, Brazil Argentina, Colombia, and Australia. The company stated that the increased purchasing power of the combined group would help reduce the costs of supplies and other operating expenses for the Sukari Mine.
Centamin is exploring the Eastern Desert for gold, while AngloGold has noted a “promising” discovery from drilling tests in an area in central Egypt that was dubbed Little Sukari.
The companies stated in a joint press release: “Little Sukari has a geological analogy to Sukari, and due to its geographical proximity, it can leverage the adjacent Sukari plant and lease.
The transaction will enable AngloGold to pursue brownfield and greenfield growth opportunities, both in Egypt and Ivory Coast and at AngloGold’s existing development projects in Nevada, Ghana, and Colombia. It will also support other brownfield initiatives throughout the portfolio. This will deliver attractive returns to both shareholders.
Morgan Stanley analysts said that AngloGold shareholders might be surprised by the timing of the announcement, as the company struck a deal “at a high point in the cycle for gold”. The announcement didn’t provide any details on the possible savings that could be made by the combined group. They said that the valuation of Centamin is “fair in the current market”.
The chairman of AngloGold Jochen Tilk said, “Today’s deal is compelling and builds upon the strong foundation that we have established.” It adds the world’s largest gold producer to our portfolio and has enormous geological potential.
In recent years, dealmakers have focused their attention on the mining industry. Glencore a London-listed commodities company, bid to take control of Teck Resources a Canadian competitor, while BHP launched a takeover offer for Anglo American. Glencore eventually took over Teck’s coal-making business. It then abandoned plans to sell off the coal assets, as they were “cash generating capacity” for its shareholders.
Anglo American was able to successfully defend itself against BHP’s PS39-billion offer by promising to implement a restructuring plan that would develop its copper assets, spin off the coal division and the platinum business Amplats based in South Africa, and De Beers diamonds.
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