Newmont Corporation’s acquisition of Newcrest Mining, which owns the Lihir gold mine in Papua New Guinea, and is one of the partners in the Wafi-Golpu copper-gold joint venture, is set to be completed in coming days. Business Advantage PNG considers what will happen next.

Post-takeover, Lihir Gold Mine will add to Newmont Corporation’s portfolio of tier-one mines. Credit: Newcrest Mining

With shareholders and regulators finally having approved US-based Newmont Corporation’s acquisition of Newcrest Mining, Newcrest shares will be de-listed from Papua New Guinea’s stock exchange, PNGX, at close of trading this Thursday 26 Thursday.

The de-listing will end a 13-year presence on the exchange for Australia-based Newcrest, which holds 100% interest in PNG’s largest gold mine, on Lihir Island, and a shared stake in the proposed Wafi-Golpu copper-gold project in Morobe Province.

Newcrest’s sale to Newmont – the world’s largest gold miner – is expected to be finalised shortly after the de-listing, which is taking place simultaneously in PNG, Australia and Canada.

‘Once complete, our combined business will feature ten Tier 1 operations, supporting decades of safe, profitable, and responsible gold and copper production, with best-in-class sustainability performance,’ said Newmont CEO Tom Palmer in a statement last week.

New financial instrument

With the rules of the New York Stock Exchange prohibiting Newmont listing its shares in PNG, Newmont will be traded on PNGX as PET depository interests, or PDIs – meeting a commitment made by Palmer after PNG’s Independent Consumer and Competition Commission approved the takeover deal in August.

This will be the first time this particular financial instrument has been used in PNG.

‘PDIs will provide holders with most of the same benefits are shares, including the right to vote at shareholder meetings and receive dividends, rights issues and bonus issues,’ explains PNGX Chairman David Lawrence. ‘They can be traded on PNGX, or exchanged for Newmont Corporation shares in the US.’

‘PDIs could provide an attractive mechanism to grow the number of foreign entities listed in PNG.’

Under a scheme of arrangement, Newmont PDIs will be issued to PNG-based Newcrest shareholders as direct replacement for their Newcrest shares. A similar scheme will operate in Australia.

Under the deal to acquire Newcrest, its shareholders will receive the equivalent of 0.400 Newmont PDIs for each Newcrest share they own, as well as a fully-franked special dividend of US$1.10 per Newcrest share.

Newmont PDIs will begin trading on PNGX this Friday 27 October. Once trading begins, Lawrence tells Business Advantage PNG, ‘the listed price should reflect Newmont’s New York share price, converted into kina.’

‘We’re delighted to be welcoming another major international resources company to the exchange, following Santos’ listing at the end of 2021,’ says Lawrence.

‘PDIs could provide an attractive mechanism to grow the number of foreign entities listed in PNG. We are hopeful of attracting another North American listing using PDIs in coming months.’

Future plans

Beyond the changes for investors, there is great interest in PNG’s business community in Newmont’s plans for its newly-acquired PNG assets, especially Wafi-Golpu, which is still the subject of negotiations following a memorandum of understanding signed in April this year.

‘Lihir in PNG is one of the world’s great gold mines and a Tier 1 operation by any measure. In addition to Lihir, we see profitable gold and copper growth through the world-class Wafi-Golpu project,’ said Tom Palmer back in August.

Newcrest has already announced plans to establish a ‘dedicated business unit’ in PNG and has appointed Alwyn Pretorius to the role of Managing Director, Papua New Guinea, based in Port Moresby.

According to a release, the former head of Newmont’s Africa and South America business will be tasked with ‘ensuring the safe and orderly integration of the Lihir operation and the Wafi-Golpu Joint Venture into Newmont’s portfolio.’