Newcrest ups stake in Lundin Gold to 32% Jackson Chen | December 6, 2019 | 10:26 am Top Companies Australia Canada Gold
Lundin Gold to step up exploration in Ecuador thanks to $38m financing Fruta del Norte, discovered in 2006, is one of the world’s biggest recent gold findings. (Image courtesy of Lundin Gold)
Newcrest Mining (ASX: NCM) has raised its stake in Canadian miner Lundin Gold from 27% to 32% with an additional C$79.6 million ($59.9 million) investment.
Newcrest announced Friday that it has acquired approximately 10.98 million shares in Lundin from Canada’s Kinross Gold at C$7.25 per share, representing a 4.2% discount to last day’s trading price.
Earlier this week, Kinross agreed to sell its remaining 9.2% stake in Lundin, which owns the Fruta del Norte gold-silver project in Ecuador, in a deal valued at roughly C$150 million ($114m). Lundin Family Trust, the other major investor that participated in the Lundin share purchase, increased its stake from 23% to 27%.
“This was a great opportunity to increase our exposure to Fruta del Norte, a tier one asset, which is expected to commence commercial production in the June 2020 quarter,” Newcrest MD and CEO Sandeep Biswas said.
Newcrest is also heavily invested in SolGold, another Ecuador-focused company. Until last week, it was SolGold’s largest shareholder until BHP further increase its stake in the Australian miner.
The Fruta del Norte mine is expected to produce 315,000 oz gold per year over a 14-year mine life at an all-in sustaining cost of $623/oz.
Lundin Gold CEO Looking for Acquisitions, and Open to a Takeover - Danielle Bochove, Bloomberg News
(Bloomberg) -- With its first commercial production around the corner, Lundin Gold Inc. is looking at options to grow -- including acquisitions.
The company’s only asset, Fruta del Norte in Ecuador, will reach commercial production in the second quarter, Chief Executive Officer Ron Hochstein said Thursday in an interview at Bloomberg’s Toronto office. The low-cost mine is expected to produce more than 300,000 ounces of gold this year, and average 325,000 ounces over its expected 14-year mine life.
The company’s largest shareholder, Melbourne-based Newcrest Mining Ltd., is supportive of a potential acquisition, as is the Lundin family, also a major owner, Hochstein said. “The challenge for us is going to be finding something that’s accretive for our shareholders.”
Lundin Gold has marked out a “concentric circle” of geographic targets in which a “bulls-eye” would be a pure-play gold asset in Latin America, outside Ecuador. Beyond that, the Vancouver-based miner would look at the rest of the Americas and then the world, excluding Russia, China and the “Stans.” Meanwhile, it will focus on organic growth through additional land holdings in Ecuador, he said.
Funding an acquisition would likely not be difficult, he said, noting that the company works with seven banks and also has private equity investment through Orion Mine Finance. “Everyone seems very happy and I think if we were to do something, we’ve got the resources,” Hochstein said. “If it’s right and it’s accretive, we’ll spend what we have to spend to get it.”
Asked about the potential that Lundin Gold could be a takeover target, given a wave of M&A in the sector, Hochstein said the company would welcome a buyer if the price was good.
“That’s partly why a lot of investors invest with the Lundins; because they know if the value is right for the family, they sell,” he said. “There’s no sacred cows.”
Newcrest would be the most logical buyer, he confirmed. “But the family’s going to have to be happy with the price. We can’t have the thing where Newcrest could just continue to creep and kind of own it, and the next thing you know we’re a subsidiary of Newcrest.”
Newcrest recently increased its holdings in Lundin to 32%, while companies associated with the Lundin Family Trust also increased their stake.
Newcrest couldn’t immediately be reached for comment.
To contact the reporter on this story: Danielle Bochove in Toronto at dbochove1@bloomberg.net
To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Steven Frank, Joe Richter
News 
Market Data 
Discover 
