Newmont up its golden offer

Amid industry predictions for gold prices to rise beyond all-time highs, US industry titan Newmont Mining has upped its offer for Australian company Newcrest Mining by 16 per cent, making it a $29.4 billion acquisition bid that, at the very least, raised an eyebrow from shareholders.

Newcrest will now open its books for a formal due diligence process, giving it would be buying a peek behind the curtains to see if the value is there – at the same time, ascendant gold moves past the key market of US$2000 an ounce, buoying the importance of both buyer and seller.

“It’s hard to say whether it’s enough or not as there’s still a considerable amount of risk in the bid for Newcrest shareholders. It’s a non-binding offer, and there is currency risk involved, but the biggest risk is that the offer is mostly based on the value of Newmont shares,” Investors Mutual Limited Portfolio Manager Tim Wood said.

“Markets are very volatile right now and while Newmont’s share price has risen recently off the back of the strong gold price, if this reverses then Newcrest shareholders could end up with significantly less.

“How the share price performs could indicate how well it has sold the bid to its own shareholders.”

While markets have been turbulent, it has been to the benefit of gold investors, and commodity strategists see the price of gold moving as high as US$2600 an ounce, and even more predict the precious metal easily surpassing an all-time-high sitting well within reach at US$2074.88 per ounce.

Perhaps more valuable than any current spot price set to rise and fall beyond any one miner’s control is gold’s reaffirmed premier status as a safe haven investment, with calls that the metal which has captured human fascination for millennia was no longer in vogue with crypto-touting millennials looking foolish with the benefit of hindsight.

A rising tide lifts all boats, and Australian miners and investors have done well out of an ASX All Ordinaries Gold Indices, which has been buoyed by almost 27 per cent over the last month.

But it has always returned, and the Australian gold industry has proven that it keeps its trunks on.

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