Lihir Gold has rejected a takeover bid by fellow gold miner Newcrest Mining.
Newcrest made the approach on 29 March, where it would acquire 100% of Lihir for approximately $9.2 billion, offering one Newcrest share for every nine Lihir shares as well as $.225 per share, with the offer being equivalent to $3.87 per share.
Lihir outright rejected the offer, with chairman Ross Garnaut saying “the offer undervalued Lihir, both in terms of its existing business and potential value.”
While “Newcrest was given the opportunity to make an offer that would deliver full value, the board’s assessment was that the offer was inadequate.
“We felt we had an obligation to shareholders to reject the offer.”
Lihir stated that the company is currently undervalued by the market and has made steps towards correcting the valuation shortfall, such as the recent appointment of new chief executive Graeme Hunt.
The miner has projects in Papua New Guinea and West Africa, with aims to lift its current output of 1.124 million ounces of gold by 40% to 1.45 million ounces from 2012 to 2018.
Lihir stated that it would be open to further proposals.