Firm business

Regulators allow sale of BC gold mine to Australian firm – Reuters

Canadian and Chinese regulators have cleared the sale of a gold mine in British Columbia to Australian resource company Newcrest Mining Ltd.

The roughly $3.5 billion deal brings the Brucejack gold mine north of Terrace under the control of Newcrest, which has acquired Vancouver-based Pretium Resources Inc. as part of a cash and stock transfer announced last November.

In Canada, the deal was cleared on Feb. 25 under the Investment Canada Act, which reviews foreign investment for national security, and the Competition Act, which aims to prevent anti-competitive practices in the marketplace.

The law calls for a review of investments over $1.141 billion by any non-state investor from World Trade Organization countries.

But because at least some of Brucejack’s gold ends up in China, and Newcrest sells gold to third parties who then sell it to China, the companies also had to clear Chinese regulators.

On January 14, the State Administration for Market Regulation of the People’s Republic of China reportedly cleared the deal under China’s anti-monopoly law.

According to the transaction contract, China’s approval was a condition precedent to the deal. China has two types of reviews, including a “simple” one for mergers of companies with a combined market share of less than 15%, which would include Newcrest and Pretium.

The review determines whether the transaction “would result in the elimination or restriction of competition in China,” according to the contract.

Brucejack is the fourth-largest mine in the province and the largest not operated by mining juggernaut Teck Resources Ltd. It is also the largest underground mine in British Columbia. In 2020, it produced over 347,000 ounces of gold for approximately $828 million in revenue.

Neither company discloses the amount of gold sold to China (or sold to China through third parties).

Pretium is to be delisted from the New York Stock Exchange and the Toronto Stock Exchange by the end of the week.

Newcrest paid shareholders either $18.50, or 0.8084 Newcrest shares per Pretium share, which represents a premium of 23% based on the share price in November (rising gold prices have since pushed Pretium stock above $19).

Pretium said the transaction was also approved by 95.48% of votes cast by shareholders.

On March 10, Newcrest shares sold for US$19.92 as the price of gold flirted with $2,000 an ounce.