Lihir Gold's executive chief began its move in selling its merger proposals to shareholders on its joint venture Newcrest Mining as it will provide them with many benefits.

Dr. Ross Garnaut, head of Lihir, told participants in an annual general meeting that company directors unanimously agreed on the $9.5 billion takeover proposal from Newcrest and it will fare well with the shareholders.

"There are benefits driven by increased scale, lower cost of capital, greater efficiencies in procurement and numerous other advantages that make this a compelling merger," Dr Garnaut said in a statement.

Under the proposal, Newcrest will pay Lihir investors one Newcrest share for every 8.43 Lihir shares, including a 22.5 cents cash per Lihir share.

Dr. Garnaut further adds that a partnership with Newcrest will deliver strong results and bring benefits with their shareholders to achieve the strategic goals of both companies.

Dr. Garnaut also confirmed that the company is allowed to engage in talks with other companies who might also express interest to bid until June 8.

If a merger between Lihir and Newcrest will push through, they will be ranked as the world's fourth largest gold miner, with a market capitalization of $25 billion.

The partnership will also become Australia's biggest resource sector takeover.

Lihir's shares declined to six cents or 1.58 per cent, to $3.73 today.