U.S. gold giant Newmont Mining Corp (NYSE: NEM) passed one of the biggest regulatory hurdles barring its planned merger with Canada’s largest mining company, Goldcorp (TSX: G). The Denver-based gold miner went on to say that the Canadian Competition Bureau had given permission for the $10 billion combined transaction to proceed and is now working with other regulatory bodies to finalize the remaining approvals.
Currently, the deal is expected to take place in the second quarter of 2019, in which the combined entity called Newmont Goldcorp would be created. Newmont says it expects to see $100 million in savings from synergies between the two giants once concluded, with the new corporate headquarters being moved to Vancouver.
“This combination creates the world’s premier gold company. In addition to the depth and quality of Newmont Goldcorp’s operations, projects, exploration properties, and Reserves, the combined company’s assets will be centered in the world’s most favorable and prospective mining jurisdictions and gold districts,” said Goldcorp CEO David Garofalo at the time of the announcement. “The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels, and both teams are fully committed to delivering on the transaction’s value proposition for all of our stakeholders. Newmont Goldcorp will be one of Canada’s largest gold producers and will have its North America regional office in Vancouver, and expects to oversee more than three million ounces of the combined company’s total annual gold production.”
Goldcorp, the world’s third-largest gold producer, has been struggling over the past few years. One poor quarter released in October saw the company’s share prices drop almost 13 percent to 16-year lows, according to Bloomberg. The company’s decline is a reflection of a wider problem in the mining industry, with many large companies looking to M&A activity for growth and change.
At the same time, the announcements come at a time when gold is making a major comeback. Most analysts expect 2019 to be an exceptional year for precious metals, with many analysts expecting gold to break the $1,400 mark. Gold companies are equally anticipated to enjoy this increase, and the new gold-mining giant will likely see a strong year of performance going forward.
Shares of Newmont Mining increase 3.8 percent today in response to the news with Goldcorp increasing by the same amount.
Newmont Mining Company Profile
Newmont is a leading gold and copper producer. The Company’s operations are primarily in the United States, Australia, Ghana, Peru and Suriname. Newmont is the only gold producer listed in the S&P 500 Index and was named the mining industry leader by the Dow Jones Sustainability World Index in 2015, 2016, 2017 and 2018. The Company is an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925. – Newmont
Goldcorp Company Profile
Goldcorp Inc. operates as a gold producer that engages in the acquisition, exploration, development, operation, and reclamation of precious metal properties in Canada, the United States, Mexico, and Central and South America. The company sells gold, silver, zinc, copper and lead. The company’s principal product is gold ore with the refined gold bullion sold primarily in the London spot market. In addition to gold, the company produces silver, copper, lead and zinc primarily from concentrate produced at the Peñasquito Mine and Alumbrera Mine, which is sold to third-party smelters and refineries. – Bloomberg