AngloGold Ashanti to Buy Centamin for $2.5 Billion — 2nd Update

By Christian Moess Laursen

AngloGold Ashanti agreed to buy smaller peer Centamin in a deal valuing it at $2.5 billion as the U.S.-listed global miner seeks to boost its portfolio by adding one of the world's largest producing gold mines amid surging prices for the precious metal.

AngloGold Ashanti, which is among the world's top gold producers, said Tuesday that the transaction values each Centamin share at 163 pence, representing a 36.7% premium to Monday's closing price.

The deal brings Centamin's flagship Sukari mine in Egypt into AngloGold's fold, boosting gold output by around 450,000 ounces a year to above 3 million ounces.

Gold miners are seeking to secure supply to capitalize on high demand for the yellow metal. Prices have gone up 30% over the last 12 months, setting a fresh all-time high last month on the back of safe-haven demand and hopes of interest rate cuts, bolstering the coffers of producers.

Last month, Gold Fields agreed to buy Canada's Osisko Mining for $1.57 billion, giving the South African mining major full control of Canada's largest gold deposit, Windfall.

More takeover offers could come in the next six months given easing inflationary pressures, which implies less of a squeeze on margins, making investors more willing to pay a higher multiple of earnings to own shares, AJ Bell investment director Russ Mould said in a market comment following news of the offer.

Following completion, shareholders in AngloGold will own 83.6% of the combined company, while Centamin holders will own the remaining 16.4%.

The deal is a highly compelling fit and offers geological potential that AngloGold is well placed to develop, its Chair Jochen Tilk said.

The company--which is based in Denver, Colorado, and has its primary listing on the New York Stock Exchange--expects the deal to be accretive to free cash flow per share in the first full year after completion. It expects the addition of the Sukari mine will reduce unit cash costs and all-in sustaining costs of the combined group.

It said it plans to use its exploration know-how to unlock additional growth and mine-life extension opportunities at the gold mine. Sukari has a gold reserve of 5.8 million ounces and a life-of-mine of 13 years.

Centamin's board intends to unanimously recommend the deal to shareholders.

In a separate release, London-listed Centamin reiterated its full-year outlook for production and costs and said higher gold prices helped it generate $75.5 million in free cash flow in the first two months of the third quarter, compared with the $43 million it garnered in the first six.

The company was built on the explorations success of its Egyptian founders with the Sukari discovery in the 1990s. It is one of the last pure gold producers on the London Stock Exchange, and its exit would leave Endeavour Mining--which tried to buy Centamin in 2019 for $1.9 billion--as the only large primary gold miner on the U.K. stock market.

Centamin also operates an exploration program called Eastern Desert Exploration in Egypt near the Sukari mine, as well as two gold projects in the Ivory Coast.

Its shares jumped 25% to 148.90 pence in morning trading, their highest in four years.

Write to Christian Moess Laursen at christian.moess@wsj.com

(END) Dow Jones Newswires

September 10, 2024 05:48 ET (09:48 GMT)

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