AngloGold in $2.5bn deal for Centamin, targets ‘Tier 1’ assets

AngloGold Ashanti is now in a position to pursue growth through the acquisition of high-value assets, CEO Alberto Calderon said on Tuesday, after the miner agreed to buy Egypt-focused smaller rival Centamin in a $2.5 billion stock and cash deal.

Shares in Centamin jumped over 20% to their highest level since October 2020, while those of its London-listed peer Hochschild rose over 2.5%. New York-listed AngloGold’s shares were down 8% at 1548 GMT.

Calderon, appointed CEO in 2021, said AngloGold had over the past three years worked to “put its house in order” before scouring for acquisition targets.

“At some point we would start looking for deals that would enhance our focus on Tier 1 assets,” Calderon said during a call, referring to high value, low cost projects or operations with a long life.

“This will open the way for a lot of interesting strategic possibilities in AngloGold,” he added.

Calderon said AngloGold’s focus on Tier 1 assets meant it would be “very open” to disposing of Centamin’s Doropo project in Ivory Coast as well as its existing Brazilian assets, Córrego do Sítio and Serra Grande.

Under the terms of the deal, Centamin shareholders will receive 0.06983 new AngloGold shares for each Centamin share and $0.125 in cash.

The implied 163 pence ($2.14) per share offer represents a premium of 36.7% to Centamin’s Monday closing price of 120 pence, the companies said in a statement.

The acquisition coincides with a flurry of deal activity in the gold mining sector over the past couple of years, with the world’s top gold producer Newmont buying Australia’s Newcrest Mining for $16.8 billion in late 2023.

On Aug. 12, AngloGold’s peer Gold Fields announced a deal to acquire Osisko Mining for C$2.16 billion ($1.59 billion), two years after an attempt to buy another Canadian miner, Yamana Gold, was scuppered by a rival offer from Agnico Eagle and Pan American Silver Corp.

Following the completion of the Centamin deal, it is expected that AngloGold shareholders will own about 83.6% and Centamin shareholders about 16.4% of AngloGold Ashanti’s enlarged issued share capital.

AngloGold Ashanti said it expects the deal to be accretive to free cash flow per share in the first full year post completion of the transaction.

Describing the deal as “highly compelling”, AngloGold Ashanti Chair Jochen Tilk said it offered “enormous geological potential” that the company was well-placed to develop.

Centamin’s principal asset is the Sukari gold mine, which is Egypt’s largest gold mine as well as one of the world’s largest producing mines.

Adding Sukari’s annual output of 450,000 ounces would push AngloGold’s yearly production above 3 million ounces, making it the fourth largest gold producer in the world by volume, behind Newmont, Barrick Gold and Agnico Eagle.

The Centamin acquisition also expands AngloGold’s portfolio to yet another key gold producing region. It currently has assets in nine countries – Tanzania, the Democratic Republic of Congo, Ghana, Guinea, Australia, the U.S., Brazil, Argentina and Colombia.

The Centamin board said it intends to unanimously recommend the deal to its shareholders.