Once the transaction is complete, Newcrest will own both operating gold mines in B.C.'s Golden Triangle region. Courtesy of Pretium Resources.

Australian gold and copper producer Newcrest Mining announced on Nov. 9 that it had reached an agreement to acquire Canadian gold miner Pretium Resources in a deal worth $3.84 billion.

Pretium shareholders will have the option to accept $18.50 in cash per share following the approval of the deal. Alternatively, shareholders that elect not to take the cash offer can receive a consideration of $9.25 and 0.4042 Newcrest shares per Pretium share. The price represents a 23 per cent premium over Pretium’s closing share value as of Nov. 8.

Pretium’s primary asset is its Brucejack gold mine in northwestern British Columbia. The mine has produced 1.4 million ounces of gold since beginning commercial operation in July 2017, and in the first half of 2021 produced 168,878 ounces at an all-in sustaining cost of $1,053 per ounce. According to the company’s 2020 life of mine plan, Brucejack contains total proven and probable reserves of 4.2 million ounces of gold from 15.7 million tonnes grading at 8.4 grams per tonne and a life of mine of 13 years.

Brucejack was subject to a COVID-19 outbreak in the first quarter of 2021, which resulted in lowered production in the second quarter. According to the Pretium’s second quarter results, the company recorded revenues of $152.3 million, an 8.6 per cent decrease compared to the second quarter of 2020, a loss driven primarily by an 11.9 per cent reduction in gold ounces sold in the quarter.

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“With this acquisition, Brucejack will join Newcrest’s portfolio of tier one assets, mitigating the inherent risks associated with ownership of a single-asset mining company,” Pretium president and CEO Jacques Perron said. “Moreover, Newcrest has the financial means and the intention of maximizing the long-term potential of the Brucejack mine and the district scale opportunities surrounding Brucejack property.”

Newcrest’s asset portfolio includes four operating mines – the Telfer and Cadia gold-copper mines in Australia, the Lihir gold mine in Papua New Guinea and the Red Chris copper-gold mine in B.C. – and two projects in development with the Wafi-Golpu joint venture with Harmony Gold Mining in Papua New Guinea and the Havieron joint venture with Greatland Gold in Australia. According to Newcrest, the addition of the Brucejack mine will bring the company’s annual gold production to above two million ounces.

“We are delighted to be expanding our presence in this highly prospective region in British Columbia. Brucejack is a tier one mine in a tier one jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long-life, low-cost portfolio…,” Newcrest managing director and CEO Sandeep Biswas said. “The combination of Newcrest and Pretium will create the leading gold miner in British Columbia’s Golden Triangle, operating both the Brucejack and Red Chris mines.”

The deal, which was approved unanimously by Pretium’s board of directors, will require 66.6 per cent approval by Pretium’s shareholders. The transaction is expected to be completed in the first quarter of 2022.