AngloGold Ashanti to Buy Centamin for US$2.5 Billion, Creating Fourth Largest Gold Company

AngloGold Ashanti (NYSE:AU,JSE:ANG) has announced a US$2.5 billion acquisition of Centamin (LSE:CEY,TSX:CEE), a mining company operating Sukari — one of the world’s biggest gold mines and Egypt’s largest.

AngloGold CEO Alberto Calderon, who took over in 2021, emphasized that the acquisition is part of a broader strategy of focusing on “Tier 1” assets, which are high-value, low-cost projects with long operational life spans.

“The Transaction is free cash flow accretive in the first full year of production and NAV accretive from day one; it will also offer additional upsides as we leverage our corporate infrastructure and our core competencies in exploration, operations and asset optimisation,” he commented in a Tuesday (September 10) statement.

Calderon also told Reuters that the move comes after a major reorganization at AngloGold.

Centamin shareholders will receive 0.06983 new AngloGold shares and US$0.125 in cash for each Centamin share held. The offer represents a 36.7 percent premium to Centamin's closing share price the day before the news.

Following the merger, Centamin shareholders will own approximately 16.4 percent of the combined company, with the remainder held by AngloGold shareholders. The addition of Sukari's output is set to boost AngloGold's production by 450,000 ounces annually, taking the firm's yearly gold output to more than 3 million ounces.

That will make it the fourth largest gold producer globally, only trailing Newmont (TSX:NGT,NYSE:NEM), Barrick Gold (TSX:ABX,NYSE:GOLD) and Agnico Eagle Mines (TSX:AEM,NYSE:AEM).

The acquisition also comes during a period of heightened M&A activity in the gold sector.

Several key deals have taken place recently, including Newmont’s US$16.8 billion acquisition of Newcrest Mining in 2023 and Gold Fields’ (NYSE:GFI,JSE:GFI) planned US$1.59 billion purchase of Osisko Mining (TSX:OSK,OTC Pink:OBNNF).

Currently AngloGold operates in nine countries, including Tanzania, Ghana, Australia and the US. Sukari will add Egypt to this list, providing the company with access to one of the largest producing gold mines in the world.

Reuters notes that AngloGold may look to divest certain properties post-acquisition, including Centamin’s Doropo project in Côte d'Ivoire and two of AngloGold’s Brazilian operations. That will allow the company to refocus its portfolio around its most valuable assets while still benefiting from the expanded production capabilities the Centamin deal offers.

Centamin’s departure from the London Stock Exchange falls within a continued trend of mining companies consolidating and shifting their listings to new regions. After Centamin is acquired, Endeavour Mining (LSE:EDV,TSX:EDV,OTCQX:EDVMF) will be the only major precious metals mining company present on the exchange.

Shares of AngloGold declined by approximately 8 percent immediately following the announcement, while Centamin’s share price surged by over 20 percent in London as investors reacted to the news.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.