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Newmont Mining Corp. is buying Goldcorp Inc. to form the world’s largest gold miner, report Bloomberg‘s Thomas Biesheuvel and Elena Mazneva. This deal and the recent acquisition of Randgold by Barrick will be followed by numerous smaller deals in response as both giants sell certain assets. Bloomberg reports:
The deal will create a company that runs mines in the Americas, Australia and Ghana and exceeds Barrick-Randgold in scale, producing about 7.9 million ounces of gold a year. It also rivals Barrick’s purchase of Placer Dome Inc. as the gold-industry’s biggest takeover. That deal had a final value of about $9.9 billion when it closed in 2006, according to data compiled by Bloomberg.
Mine Sales
Newmont and Goldcorp said they will sell up to $1.5 billion in assets over the next two years, echoing a similar Barrick pledge to concentrate on the best-performing mines. Newmont also promised initial cost savings from the merger of $100 million a year.
The promise of unloading assets, something Barrick is also expected to do, will have repercussions for the industry as a host of mines are likely to be put up for sale. Additionally, the two big deals will add pressure to other gold miners such as Kinross Gold Corp. and AngloGold Ashanti Ltd., which have missed out on the sudden deal rush.
“I can see a new wave of mid-tier producers being spawned from assets deemed sub-economic by the two ‘giants,’” said Hodgson.
Read more here.
Jeremy Jones, CFA
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