Two major resources companies have combined to make what is touted to be the world’s largest gold mining company by output.
Newmont Mining Corporation will buy all remaining shares in Goldcorp. The stock-for-stock transaction is worth US$10 billion (A$13.8 billion) and will involve Newmont buying each Goldcorp share for 0.3280 of a Newmont share, representing a 17 percent premium on the current trading price per share.
Newmont promised the deal would create an “unmatched portfolio” of operations, projects, exploration opportunities, reserves and people in the gold mining sector. This will be achieved through having an “unparalleled” project pipeline and exploration potential in the most prospective gold districts around the world.
“We expect to generate up to US$100 million (A$138.6 million) in annual pre-tax synergies, with additional cost and efficiency opportunities that will be pursued through our proven full potential continuous improvement program,” Newmont chief executive officer Gary Goldberg said in a stock exchange announcement.
“We have a proven strategy and disciplined implementation plan to realize the full value of the combination, including an exceptional pool of talented mining professionals, stable and profitable gold production of six to seven million ounces over a decades-long time horizon, the sector’s largest gold reserve and resource base, and a leading project and exploration pipeline.”
The enlarged company, Newmont Goldcorp, will focus on growing its existing workplace culture of zero harm, inclusion, diversity, environmental responsibility and governance. Using 2017 figures the merged company’s annual gold production is estimated to total 7.9 million ounces.
“We constantly review opportunities to raise our performance, and this combination represents the most promising path to deliver superior and sustainable value for our shareholders, employees, host countries and communities,” Goldberg said.
Supported by stable, profitable long-term production and an investment-grade balance sheet, Newmont Goldcorp is promised to have the financial flexibility to fund project development and exploration in the decades ahead.
Newmont operates the Kalgoorlie Gold Mine in Western Australia, Boddington Gold and Copper Mine, 120km north of Perth, and Tanami gold mine, 547km northwest of Alice Springs in the Northern Territory. Goldcorp operates four mines in Canada, one in Argentina and another in Mexico.
“This combination creates the world’s premier gold company,” Goldcorp president and CEO David Garofalo said in a stock exchange announcement. “Newmont Goldcorp will [also] 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.”
Newmont Goldcorp said it would offer a high annual dividend to shareholders.