The deal, the second high-profile merger in the mining industry
since Barrick Gold Corp agreed to buy Randgold Resources Ltd in
September last year, comes as the industry looks for ways to cut
costs and increase scale.
The company, which will be called Newmont Goldcorp, is set to
overtake current leader Barrick Gold's annual production and
will have mines in Americas, Australia and Ghana.
The Denver, Colorado-based company Newmont will also sell $1
billion to $1.5 billion worth of assets over the next two years
as part of the deal, mirroring a similar move by Barrick when it
announced the Rangold acquisition.
After the deal the new company expects to produce 6-7 million
ounces of gold annually over the next ten years and beyond.
Barrick has forecast 2018 total gold production in the range of
4.5 million to 5 million ounces.
The new company will be led by Newmont Chief Executive Officer
Gary Goldberg. Goldberg will retire at the end of 2019 and Tom
Palmer, Newmont's chief operating officer, will then take over
as the CEO.
Newmont will offer 0.3280 of its share and $0.02 for each
Goldcorp share. Based on Newmont's Friday close, that translates
to $11.46 per share, a premium of about 18 percent to Goldcorp's
Friday close on the New York Stock Exchange.
The deal is scheduled to close in the second quarter and is
expected to generate up to $100 million in savings, the company
said.
Vancouver-based Goldcorp's U.S.-listed shares were up about 13
percent before the bell on Monday. Newmont Mining's shares were
down 3 percent.
(Reporting by John Benny in Bengaluru; Editing by Shailesh Kuber
and Sweta Singh)
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