AngloGold Ashanti to buy Centamin for US$2.5 billion

AngloGold Ashanti (JSE: ANG; NYSE: AU; ASX: AGG) is buying Egypt-focused smaller rival Centamin (LSE: CEY) in a US$2.5 billion stock and cash deal that would see the South African gold miner become the world’s fourth-largest producer of the precious metal.

The acquisition hands AngloGold the key Sukari mine in Egypt, the country’s first modern gold operation and one of the world’s largest which has produced some 5.9 million oz. of gold since 2009. It can increase AngloGold’s annual production by around 450,000 oz., bringing its total output to 3.1 million ounces.

“Today’s transaction is highly compelling and builds on the strong foundation we have built,” AngloGold chair Jochen Tilk said in a statement. “It adds to our portfolio as the pre-eminent gold producer in Egypt and offers enormous geological potential that we are very well placed to develop.”

Shares in Centmin shot up 23% to $2.62 apiece in Toronto, valuing the company at $1.7 billion. They’ve traded in a 52-week range of $1.31 to $2.66. AngloGold Ashanti fell nearly 7% to US$26.82 on Tuesday morning in New York for a market capitalization of US$2.3 billion. 

Under the terms of the deal, Centamin shareholders will receive 0.06983 new AngloGold shares for each Centamin share and US12.5¢ in cash. The offer represents a 37% premium to the target company’s closing price on Monday, the parties said. AngloGold shareholders are to hold about 84% of the combined entity while Centamin investors will own roughly 16%. 

South Africa in rear-view mirror

AngloGold, with assets spanning from Australia to Brazil, has shifted its focus away from South Africa, the country where it was founded more than a century ago. It sold its last asset there to Harmony Gold (NYSE: HMY) in 2020, and last year it moved both headquarters and primary listing to London and New York, respectively.

The transaction is the latest in a flurry of industry deals fuelled by record-breaking prices for the precious metal. Top deal-maker Newmont (NYSE: NEM) bought Australia’s Newcrest Mining for US$19 billion last year, cementing its position as the top gold producer.

Agnico Eagle Mines (TSX, NYSE: AEM) has completed two major transactions since 2022, positioning itself among the top five producers of the precious metal by market value. Last month, South Africa’s Gold Fields (JSE, NYSE: GFI) bought Canada’s Osisko Mining (TSX: OSK) in a deal approaching $2.2 billion.

The deal also marks the latest blow to the London stock market. The exchange has faced challenges since Randgold’s delisting after its merger with Barrick Gold (TSX: ABX; NYSE: GOLD) in 2018, and the massive departure of Russian gold miners following Moscow’s invasion of Ukraine.