Canadian Mining Journal


GOLD: Newmont to pay $10B for Goldcorp, creates world’s leading gold miner

The next new mine in Goldcorp’s development pipeline is the all-electric Borden underground mine in Ontario. (Image: Goldcorp)

Denver-based Newmont Mining Corp. and Goldcorp of Vancouver announced plans on Jan. 14 to merge, creating the world’s leading gold producer. When the US$10 billion (all figures U.S. dollars) deal closes, a new company, Newmont Goldcorp, will be created.

Newmont is offering an all-share deal to Goldcorp investors – 0.3280 of a Newmont share for each Goldcorp share. The assumed price is a 17% premium on both company’s 20-day volume weighted average share prices.

Newmont is calling the merged company the world’s leading gold miner. Can that be true?

This announcement comes just a couple weeks after Barrick Gold’s buyout of Randgold.

Looking at market capitalization, it would seem so. Goldcorp’s market capitalization is about $12.0 billion, and Newmont’s close to $17.0 billion; together that is $29 billion. Since swallowing Randgold, Barrick’s market cap is $21.6 billion.

That’s a win for Newmont Goldcorp.

Look now at production. In 2018 Goldcorp and Newmont together produced about 7.5 million oz. of gold. Combining Barrick’s and Randgold’s 2018 output, puts their total at 6.3 million oz.

Looks like another win for Newmont Goldcorp.

Readers who have time to spare, may want to work out comparisons of reserves and resources, or the number of working mines, or development projects, or exploration budgets, or production costs. There might be some interesting comparisons among those statistics.

It does look as if Barrick has lost its place as the gold miner with the largest production. Since 2010 when it produced nearly 7.8 million oz. of gold, Barrick’s output has been sliding. The Randgold acquisition stabilizes Barrick’s output number but cannot lift it to the former high level.

Although seeing Newmont acquire Goldcorp is not creating as much angst as did the loss of Falconbridge and Inco from the Canadian corporate stage. Perhaps it is because Newmont Goldcorp looks more like a merger of equals, at least in terms of how the new company has said it will go forward. The Goldcorp name remains prominent. The merged company will maintain offices for its North and South American operations in Vancouver.

Perhaps the Newmont-Goldcorp deal will prove to be a real win-win.

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