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Newmont takes top gold producer spot with $10 billion Goldcorp buy


By and Nichola Saminather

(Reuters) - said on Monday it would buy smaller rival for $10 billion, creating the world's biggest in the face of dwindling easy-to-find reserves of the

The transaction, the biggest ever takeover in the gold sector according to Refinitiv, follows Barrick Gold Corp's agreement in September to buy in a deal valued at $6.1 billion.

"Combining forces will give us the sector's best project pipeline and exploration portfolio," Newmont said on a conference call with analysts. "These prospects translate to the gold sector's largest reserve and resource base."

Vancouver-based Goldcorp's Toronto-listed shares rose 7 percent to C$13.75 at 12:03 p.m. ET (1703 GMT). Newmont Mining's shares were down about 8.8 percent at $31.83 in

In recent years, investor criticism over inadequate of capital had largely kept gold companies focused on costs while dampening enthusiasm for acquisitions. But the need to bolster shrinking reserves and production and a rising gold price are now serving as catalysts for increased dealmaking.

Spot gold prices are up 11.3 percent since an August trough, when they had declined 15 percent from a January 2018 peak.

Newmont's acquisition of Goldcorp could spark further consolidation in the industry, where too many gold companies are chasing too few assets, from said. He did not specify which companies are most likely to follow suit.

The new company, to be called Newmont Goldcorp, is set to overtake current leader Barrick Gold's annual production and will have mines in the Americas, and

"This transaction is positive for Newmont, because it establishes it as the world's with a deal that is accretive on nearly all key metrics," analysts at wrote in a note.

The new company will be led by Newmont's Goldberg. He will retire at the end of 2019, when Tom Palmer, Newmont's chief operating officer, will take over as the CEO, the companies said.

Denver, Colorado-based Newmont expects savings of $100 million a year. The combined company will sell $1 billion to $1.5 billion worth of assets over the next two years as part of the deal, mirroring a similar move by Barrick when it announced the acquisition.

The new company is expected to produce 6-7 million ounces of gold annually over the next 10 years and beyond versus Barrick's 2018 forecast of between 4.5 million and 5 million ounces.

Newmont will offer 0.3280 of its share and $0.02 for each Goldcorp share. Based on Newmont's Friday close, that translates to $11.46 per share, a premium of about 18 percent to Goldcorp's Friday close on the Stock Exchange. nBw4JX5tpa]

That remains below premiums paid in the last decade for gold deals, analysts said in a note.

The transaction is scheduled to close in the second quarter, the companies said.

BMO Capital Markets, and are working as for Newmont, while Goldcorp has retained and Merrill Lynch as financial advisors, the companies said.

(Reporting by in Bengaluru and in Toronto; Additional reporting by in Toronto; Editing by and Marguerita Choy)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 14 2019. 23:16 IST