Newcrest Mining Ltd. May 11 announced that it has granted Newmont Corp. one more week to complete due diligence ahead of finalizing a merger between the two large mining companies.

In February, it was revealed that Newmont had made an all-shares merger offer of 0.363 Newmont shares for each Newcrest share held and then a second for 0.38 Newmont shares per Newcrest share.

Newcrest, however, balked from the first two offers because the board of directors did not believe either of the proposals represented the true worth of the Australia-based gold and copper mining company.

To provide Newmont executives with an inside look at the missed value, Newcrest's board agreed to provide Newmont with access to limited, non-public information on a non-exclusive basis.

After taking a look at Newcrest's books, Newmont increased its offer to 0.4 Newmont shares in exchange for every Newcrest share.

To further sweeten the deal, Newmont also agreed to allow Newcrest to pay a special dividend of roughly US$1.10 per share to its shareholders around the time of the closing of the proposed transaction.

Newmont's roughly US$19.6 million merger offer implies a value of approximately A$32.87 per Newcrest Mining share, which is a 46.4% premium over the Australian mining company's closing price of A$22.45 per share on Feb. 3, the last trading day before the proposed merger offer was made public.

Newcrest's board found this offer to be compelling enough to unanimously recommend that shareholders vote in favor of the revised proposal unless another company makes a better offer.

With a merger proposal worthy of hashing out at a negotiating table, Newcrest provided Newmont with an exclusive opportunity to conduct due diligence ahead of putting forward a binding proposal. The deadline for that in-depth assessment of Newcrest and its assets was set to expire on May 11.

With Newmont's due diligence substantially complete, Newcrest has agreed to provide the world's largest gold mining company until May 18 to finalize its evaluation and submit a binding offer.

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Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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