The merger between Newmont Mining and Goldcorp is expected to create a leading gold company in the world, to be called Newmont Goldcorp, which will have a steady, profitable gold production targeting 6-7 million ounces over a decades-long time horizon.
The combined mining company to be based in Denver, Colorado, will have a project pipeline across four continents.
The combination is expected to represent the largest in the gold industry with operations across favorable mining jurisdictions in the Americas, Australia and Ghana, representing about 75%, 15% and 10%, respectively.
Newmont Goldcorp is planned to prioritize project development by returns and risk. It will aim at $1.0-1.5bn in divestitures.
Newmont Mining CEO Gary Goldberg said: “The combination is expected to be immediately accretive to Newmont’s net asset value and cash flow per share.
“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.”
As per the agreement terms, the US mining company will acquire each Goldcorp share for 0.3280 of its share plus $0.02 per share. Existing shareholders of Newmont Mining and Goldcorp will respectively hold about 65% and 35% of the enlarged company.
Goldcorp president and CEO David Garofalo said: “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.”
The merger, which has been approved unanimously by boards of the two companies, is likely to close in the second quarter of this year.
The closing would need approval from the shareholders of the two firms, regulatory approvals across various jurisdictions like the European Union, Canada, South Korea and Mexico, along with meeting of other customary closing conditions.
In November 2018, Newmont Mining began commercial production at the Subika Underground project to expand higher-grade, lower-cost gold production at the Ahafo mine in Ghana. Around the same time, Goldcorp achieved first gold at the Pyrite Leach Project in its Peñasquito mine in Mexico.
