Newmont Mining Corporations has
declared that it would buy its smaller rival Goldcorp in a deal worth
of $10 billion. This deal would make Newmont world’s largest gold
producer at the time when easy-to-find reserves are decreasing.
The deal is the second in the last 12
months. Another high profile merger happened in last September when
Barrick Gold Corp agreed to buy Randgold Resources Ltd. It implies
how the industry is aiming to cut the costs and increase scale.
After the merger, the company will be
known as Newmont Goldcorp. And, owing to the anticipated size, it
will overtake the current leader Barrick Gold Corp in total
production. It will possess mines in America, Australia, and Ghana.
Newmont Mining Corp, Colorado-based
company, will also sell assets worth of $1 billion to $1.5 billion
over the next few years as a part of the deal, and the same had
happened in the last year’s merger between the when Barrick Gold Corp
agreed to buy Randgold Resources Ltd.
After the completion of the deal, the
company hopes to produce 6-7 million ounces of gold annually for the
next ten years whereas Barrick has expected of providing 4.5 million
to 5 million annually.
Newmont Chief Executive officer Gary
Goldberg will lead the new company. And he is scheduled to retire by
the end of 2019. And, the reign will be overtaken by the existing
Chief Operating Officer Tom Palmer.
Newmont has declared of offering 0.3280
of its share plus $0.02 for each share of Goldcorp. And, it would be
translated to a share price of $11.46 per share in the market for
Newmont Mining Corp. It would be gaining a premium of 18 percent as
per the data with New York Stock Exchange.
The deal is scheduled to end by the end
of the second quarter, and it will save $100 million for the company.
Vancouver-based Goldcorp’s U.S.-listed
shares inflated about 13 percent before the bell on Monday. Newmont
Mining’s shares were down by 3 percent prior to the merger.