Gold miner Centamin rebuffs £1.5bn approach from Canadian rival

London-listed miner Centamin has turned down a 1.9 billion dollar (£1.5 billion) takeover offer from its Canadian rival Endeavour Mining, after a tidal wave of big-name consolidation in the gold sector.

The all-share offer would benefit Endeavour’s shareholders more than Centamin’s, the board said, and does not “adequately reflect the contribution that Centamin would make to the merged entity”.

“Centamin is better positioned to deliver shareholder returns than the combined entity,” the London and Toronto-listed company’s board said.

They recommended that shareholders do nothing in response to the offer, saying that the board was unanimous in its decision to reject Endeavour’s approach.

Mark Bristow
Mark Bristow

The offer follows a series of major consolidations in the gold sector in recent years.

Canada’s Barrick Gold last year snapped up Randgold off the London Stock Exchange for 6.5 billion dollars (£5 billion), in a deal which installed Randgold boss Mark Bristow as the chief executive of the combined entity. This briefly created the world’s largest gold miner.

However just months later Canada’s Newmont announced a merger with Goldcorp, which would make it the biggest gold miner in the world. Not to be outdone, Mr Bristow then launched an audacious hostile takeover for Newmont itself, a bid which would have let him keep the crown as the world’s largest gold miner.

However, after trading several barbs with Newmont boss Gary Goldberg, who he called a “loser” at one point, Mr Bristow backed off. Instead the two firms signed an agreement to merge their assets in Nevada.

Mr Bristow also won a battle to take Acacia Mining off the London market. Barrick was already the biggest shareholder in Acacia, but launched the bid to buy the remaining shares, and take it private, after Acacia faced a years-long dispute with the Tanzanian government over a tax bill.

Tanzania’s president John Magufuli claimed that the company owed 190 billion dollars (£146 billion) in back taxes, around four times Tanzania’s annual GDP, after allegedly under-reporting the amount of gold it was exporting in its ore. Acacia always denied the claims. Barrick has since reached a settlement with the Tanzanian government.

And in Canada last week, Kirland lake offered 4.9 billion Canadian dollars (£2.8 billion) for Detour Gold, while Australian gold producer Evolution Mining bought assets from Newmont Goldcorp for nearly half a billion US dollars (£385 million).