Centamin to be taken over by AngloGold Ashanti in £1.9bn deal

10th Sep 2024 07:51

(Sharecast News) - Gold miner Centamin - which operates the Sukari gold mine in Egypt - said on Tuesday that it had agreed to be taken over by AngloGold Ashanti in a £1.9bn deal.

Under the terms of the transaction, Centamin shareholders will receive 0.06983 new AngloGold Ashanti shares and $0.125 in cash.

The price represents a premium of around 36.7% to the closing share price on Monday.

Centamin chief executive Martin Horgan said: "Centamin stewardship of the Sukari mine from discovery through development and into continual operation since 2009 is a demonstration of the world-class mining potential of Egypt.

"Completion of the reinvestment phase alongside consistent operational delivery underlines the Tier 1 status of Sukari as a safe, low-cost and large-scale gold producer. Sukari is strategically well placed within the emerging Arabian Nubian Shield.

"The transaction will allow our assets to grow as part of AngloGold Ashanti's larger, diversified portfolio, benefitting from AngloGold Ashanti's track record of responsibly developing and operating large-scale open pit and underground mines in Africa in close partnership with the host governments and communities."

At 0905 BST, the shares were up 25% at 149.04p.

Russ Mould, investment director at AJ Bell, said: "A takeover of Centamin represents the end of an era for mid and large-cap gold miners on the UK stock market.

"Centamin is one of the last pure-play gold producers remaining on the London Stock Exchange. While there are plenty of tiny exploration companies hoping to strike it rich, few have enjoyed Centamin's level of success and built a large-scale operating mine.

"Over the years, gold producers of any notable scale have been snapped up by rivals or merged with others, leaving investors with limited options on the London Stock Exchange and effectively making them look at overseas stock markets for a broader range of gold miners.

"Names like Randgold Resources, once a FTSE 100 constituent, are now long gone from London and, if AngloGold Ashanti is successful in buying Centamin, it would leave Endeavour Mining as the only big primary gold producer left on the UK stock market, along with silver producer Fresnillo which also digs up gold.

"It's surprising we've had to wait this long for someone else to make a serious offer for Centamin since Endeavour tried to buy it in 2019. Centamin owns a gigantic gold mine in Egypt called Sukari, which is the company's jewel in the crow. Sukari is the type of deposit that most gold producers dream of finding but never do. Often it is easier to buy a proven deposit than spend years looking for one.

"Centamin has continued to extend the life of the Sukari mine and no doubt AngloGold is hoping to keep the production wheels turning for at least another decade on the asset.

"AngloGold's takeover offer for Centamin has come at an interesting time for the gold mining sector. Shares in many operators have lagged the rising gold price because cost inflation has compressed profit margins. These inflationary pressures are now starting to ease, which implies that margins will start to go up, and investors might be willing to pay a higher multiple of earnings to own the shares. Therefore, gold miners feeling more confident about the future might be more willing to make acquisitions, meaning that Centamin's takeover may not be the only one we see in the sector over the next six months or so."