Newcrest Says Asia, Africa Present ‘Great’ M&A Opportunities

Newcrest Mining Ltd., set to buy smaller rival Lihir Gold Ltd. for $9.6 billion, said it’s eyeing further merger and acquisition opportunities in the Asia-Pacific region and West Africa.

“There are great opportunities in this part of the world and compared to the Americas there’s a lot less competition for some of those assets,” Chief Executive Officer Ian Smith said in an Australian Broadcasting Corp. television interview today. “We buy in so we can apply our expertise in exploration and build assets.”

Takeovers in the industry have picked up this year because of strong gold prices, Greg Fournier, Hong Kong-based head of the Asia Pacific region metals and mining investment banking at Merrill Lynch, said on Aug. 3. Gold companies have completed or are evaluating $37.5 billion of acquisitions this year, more than double last year’s total, according to data compiled by Bloomberg.

Gold for immediate delivery hit a record $1,265.30 an ounce on June 21 and is headed for a 10th annual gain.

Prices may reach at least $1,300 an ounce this year as investors seek a shield against financial turmoil, weak currencies and inflation, according to London-based researcher GFMS Ltd.

“It’s driven by recognizing gold’s rightful place as a risk leveler, so people see gold as part of a portfolio now, to be a legitimate part of how you address risk,” Smith said. “Half the pundits say that going forward we’re going to have inflation, another half of pundits say we’re going to be facing deflation. Gold is a good part of portfolio risk management in both of those environments.”

Deal Approved

Lihir and Newcrest shareholders last month agreed to an A$10.45 billion ($9.6 billion) share-and-cash deal that will create the world’s fifth-biggest gold producer.

The National Court of Papua New Guinea, where Lihir is based, approved the deal on Aug. 27.

Gold output will grow 8.2 percent annually to 3.75 million ounces from 1.76 million ounces for Newcrest and 980,000 ounces for Lihir, Newcrest said last month.

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