Due deligence findings key to merger of LGL, Newcrest

THE Lihir Gold Ltd and Newcrest Mining Ltd’s agreement for a merger could become undone if a more detailed due diligence of Lihir reveals any discrepancy that vastly reduces its value.
This is revealed in the merger agreement seen by The National which requires LGL staff to make available all the information required by Newcrest to complete its evaluation and due diligence by June 8.
Lihir will provide “access to offices, sites, management personnel, documents, records and other information as reasonably required by Newcrest” to complete its due diligence inquiries on LGL, the agreement says.
If the detailed study reveals any discrepancy that significantly reduces value of LGL by A$700 million (K1.7 billion), Newcrest could terminate the agreement before June 15 this year.
It is  understood that Newcrest has begun the process of conducting the due diligence and there’s nothing to suggest at this stage the Lihir/Newcrest merger will not be successful to make it the Asia-Pacific’s pre-eminent gold company with the Lihir mine being regarded as the “jewel in the crown” of the group whose combined value is estimated at A$25 billion (K62.25 bilion).
 “The merger between LGL and Newcrest will create a A$25 billion company, the leading gold producer in the Asia-Pacific region, one of the top few in the world, with a standout portfolio of long-life, high margin, tier one gold assets,” LGL chairman Dr Ross Garnaut said.
Garnaut has asked and received commitment from Newcrest that the new entity will maintain a robust and active relationship with the local communities on Lihir Island.
“Importantly, I have received commitments from the chairman that Newcrest will continue LGL’s approaches to the equitable sharing of the benefits of mining with local communities,” Garnaut said.