FTSE 250 gold miner Centamin is set to be acquired for £1.9bn

AngloGold Ashanti has agreed to acquire FTSE 250-listed mining company Centamin for around $2.5bn (£1.9bn).

The transaction will value Centamin shares at 163 pence, representing a 36.7 per cent premium to the group’s closing share price on 9 September.

Centamin investors will be entitled to receive $0.125 in cash and approximately 0.07 new AngloGold Ashanti shares for each Centamin share held.

Following the transaction, AngloGold Ashanti will gain control of Centamin’s Sukari mine in Egypt, which has produced more than 5.9 million ounces of gold since it began production in 2009.

Sukari, located on the Arabian-Nubian Shield, employs about 4,450 people, the vast majority of whom are Egyptians. Last year, the company achieved annual gold production of 450,000 ounces.

In a separate trading update, Centamin said it mined 93,278 ounces of gold and sold 102,563 ounces from Sukari in the two months to August.

The company’s other assets include the ABC and Doropo projects in Côte d’Ivoire, and the Eastern Desert Exploration Project in Egypt.

Following completion of the acquisition, AngloGold Ashanti shareholders will own approximately 83.6 per cent of the enlarged business, with Centamin investors owning the remaining 16.4 per cent.

Jochen Tilk, chief executive of AngloGold Ashanti, said the deal was “extremely attractive… and offers huge geological potential that we are well placed to exploit.”

He added: “This transaction offers attractive returns for our shareholders and is consistent with our approach of prudent capital allocation to optimise our portfolio.”

Centamin shares rose 24.7% to 149 pence on Tuesday morning, having risen about 71% in the past year.

If Centamin investors accept the deal, Endeavour Mining will become the last major gold producer to trade on a UK stock exchange.

The gold mining sector has seen significant consolidation in recent years amid growing concerns about dwindling gold reserves.

Newmont Corporation acquired Australian company Newcrest Mining for £15.7 billion in November 2023, while Randgold Resources, once a FTSE 100 company, merged with Canadian company Barrick Gold in December 2018.

Russ Mould, chief investment officer at AJ Bell, said the proposed takeover by Centamin “comes at an interesting time for the gold mining sector”.

He notes that shares of many gold producing companies have been following rising gold prices due to rising cost inflation that has been eroding profit margins, but that this pressure has recently started to ease.

“Gold miners feeling more confident about the future may be more willing to make acquisitions, meaning that Centamin’s takeover may not be the only one we see in the sector over the next six months,” he noted.