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Newmont to become largest gold producer with $10 billion Goldcorp buy


By John Benny

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

The deal, the second high-profile merger in the industry since agreed to buy in September last year, comes as the industry looks for ways to cut costs and increase scale.

"We will have the largest gold reserve and resource base in the world, along with the highest reserves per share in the gold industry," Newmont said on a conference call with analysts.

The deal could also spark a wider 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

Vancouver-based Goldcorp's Toronto-listed shares rose 9 percent to C$14.0 on the exchange in morning trade. Newmont Mining's shares were down about 7 percent at $32.47 in

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

Denver, Colorado-based Newmont will also 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.

After the deal the new company expects to produce 6-7 million ounces of gold annually over the next 10 years and beyond. Barrick has forecast 2018 total gold production in the range of 4.5 million to 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.

The deal is scheduled to close in the second quarter and is expected to generate up to $100 million in savings, the company said.

Newmont's premium for Goldcorp still remains below premiums paid in the last decade for gold deals, analysts said in a note.

Barrick bought Randgold in an all-stock deal valuing the at $6.5 billion.

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; Editing by Shailesh Kuber, and Frances Kerry)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, January 14 2019. 21:52 IST