Newcrest eyes smorgasbord of options

The newly created internal M&A team at Newcrest Mining appears to have plenty on its plate. Apart from constant rumours that it is a potential takeover target for the likes of North American giants Newmont Mining and Barrick Gold, Newcrest has admitted to have up to half a dozen targets of its own.

Managing director Ian Smith created the five-strong M&A team earlier this year. It is headed by Brian Kinsella who was former CFO of Oceana Gold, where he oversaw the $480 million merger with Climax Mining, among other deals.

Newcrest in September completed a $2 billion rights issue that it used to close out its hedge book and reduced its gearing from around 49 per cent to 15 per cent. That gives it plenty of flexibility to make its own purchases – Lihir Gold is one company frequently mentioned as a likely prospect - but could also make it an attractive target.

Smith said on Thursday that any purchases needed to fill several criteria – including an output of at least 200,000 ounces a year. He said there had been no approaches from any would-be predators, but there had been plenty of approaches for the company's 70 per cent stake in the Cracow mine, which is up for sale.

Should any significant deals be in the offing, Goldman Sachs JBWere and UBS, who underwrote the rights issue, might consider themselves a good chance for a mandate. CFO Greg Robinson is a former investment banker with Merrill Lynch, where he headed the metals and mining group.