Newmont Agrees to Acquire Goldcorp to Become Leading Global Gold Producer

Researched by Industrial Info Resources (Sugar Land, Texas)--Newmont Mining Corporation's (NYSE: NEM) (Denver, Colorado) planned $10 billion acquisition of Goldcorp Incorporated (NYSE: GG) (Vancouver, British Columbia) would result in what the companies say will be the world's leading gold producer, with production of 6 to 7 million ounces per year and up to $100 million in annual pre-tax synergies. Newmont Chief Executive Officer Gary Goldberg said Monday the decision to combine the companies is one of choice, and not necessity.

Industrial Info is tracking $6.58 billion in Newmont project activity, and $2.17 billion in activity by Goldcorp, for a combined $8.75 billion. For related information, see Industrial Info's January 14, 2019, market brief - Newmont's Goldcorp Acquisition Creates $8.75 Billion Project Portfolio.

Click on the image at right for a graph showing Newmont's and Goldcorp's combined project activity by country.

Goldberg and Goldcorp Chief Executive David Garofalo reviewed the basics of the deal on Monday during a conference call with industry analysts.

"Simply put, this is not a deal we have to do: it's a deal we want to do," said Goldberg, who plans to retire later this year. The transaction is expected to close in the second quarter of 2019. Newmont president and chief operating officer Tom Palmer has been designated to serve as chief executive officer of the combined group.

To be known as Newmont Goldcorp, the company will have the sector's largest gold reserve and resource base across the Americas, Australia and Africa, and a leading project and exploration pipeline, according to executives. The company would include 19 active mining operations across the globe, with nearly 20,000 employees and a total workforce of about 38,000 people. In addition to gold, the company will mine silver, copper and zinc.

Goldcorp's current Vancouver headquarters has been designated to serve as Newmont Goldcorp's North American regional office, overseeing production of more than 3 million ounces of gold production per year in Canada and the United States. The corporate headquarters would be in Colorado.

The company will target $1 billion to $1.5 billion in assets for divestiture over the next two years to optimize gold production. Newmont and Goldcorp executives said they would evaluate which assets would go on the sales block, and what projects they plan to continue.

The announcement comes on the heels of the $6.6 billion merger of Barrick Gold Corporation (Toronto, Ontario) and Randgold Resources Ltd (Jersey, Channel Islands). The new Barrick (NYSE: GOLD) incorporates Randgold's five mining complexes in Africa (Cote d'Ivoire, DRC and Mali).

Major Newmont projects that are now underway include the Ahafo Mill Expansion in Ghana and the Quecher Main expansion in Cajamarca, Peru. See Industrial Info's reports on the Ahafo and Quecher Main projects. For related information, see December 11, 2018, article - Newmont Mining Sets 2019 Capital Guidance at $1.07 Billion.

A Goldcorp project in the construction phase is the Musselwhite Gold Mine winze materials handling system addition near Pickle Lake, Ontario. The project is aimed at increasing ore capacity by 20%, improving energy efficiency, reducing ventilation requirements and lowering mining costs. For more information, see Industrial Info's project report.

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