Noah Zivitz

Managing Editor, BNN Bloomberg

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Australia-based Newcrest Mining Ltd. is doing another deal in Canada - this time it's acquiring Pretium Resources Inc. for $3.5 billion.

Under the terms of the transaction announced after the closing bells on Monday, Newcrest will buy Vancouver-based Pretium for $18.50 per share. Subject to proration, Pretium's shareholders will be able to choose between accepting the offer in cash or as 0.8084 of a Newcrest share for each share held, Pretium said in a release. Upon completion, Pretium shareholders would walk away from the deal owning eight per cent of Newcrest.

The takeover offer represents a nearly 23 per cent premium to Pretium's closing price on the Toronto Stock Exchange Monday.

The prize that Newcrest is buying in the deal is Pretium's Brucejack mine in British Columbia. According to Pretium, Brucejack has a mine life of 13 years and has produced 1,399,522 ounces of gold since mining began in 2017. Pretium has forecast up to 365,000 ounces of production this year at Brucejack, with all-in sustaining costs between $1,060 and $1,190 per ounce.

"The transaction delivers an immediate and compelling premium for [Pretium] shareholders that reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, while also offering an opportunity to benefit from potential upside as Newcrest shareholders," said Pretium President and Chief Executive Officer Jacques Perron in the release.

The deal is subject to a vote by Pretium shareholders, as well as approval under the Investment Canada Act and other standard requirements. The companies said they expect the deal to close in the first quarter of next year.

The agreement between the companies includes a $125-million break fee that Pretium would be required to pay Newcrest if it breaks away in favour of another deal.

Newcrest made a splash in the B.C. mining sector in early 2019 when it struck a deal with Imperial Metals Corp. for a 70 per cent stake in its Red Chris mine.

BMO Capital Markets served as Pretium's financial adviser on the deal. RBC Capital Markets and Lazard advised Newcrest.