Barrick Gold Corp. issued a statement Feb. 22 in answer to speculation in the markets and media that the Toronto-based company is looking to merge with Newmont Mining Corp., which is in the process of merging with Goldcorp Inc.
“Barrick Gold Corporation today confirmed that the company has reviewed the opportunity to merge with Newmont Mining Corporation in an all-share mil premium transaction. No decision has been taken at this time,” Barrick stated.
Newmont’s group executive of corporate communications, Omar Jabara, wrote in a Feb. 22 email that Newmont doesn’t “have much to add beyond saying that we are aware of Barrick’s statement that it has reviewed the opportunity for an unsolicited, no-premium merger with Newmont.
“We do not intend to speculate on Barrick’s interest or motivation. We remain confident that the combination of Newmont and Goldcorp represents an unparalleled opportunity to create value for our shareholders and deliver industry-leading returns for decades to come,” Jabara said.
Newmont and Goldcorp, meanwhile, announced on Feb. 22 that Goldcorp has received an interim order from the Ontario Superior Court of Justice on the plan of arrangement for the merger. Goldcorp is based in Canada.
The companies said the interim order allows Goldcorp to hold its shareholder meeting on April 4 and is a necessary step toward a final court order that is a condition of closing the deal. The order covers Newmont’s roughly $10 billion acquisition involving acquiring Goldcorp common shares in exchange for 0.328 of a Newmont stock and 2 cents in cash for each Goldcorp share.
Colorado-based Newmont and Goldcorp are planning to merge in the second quarter of this year. Barrick and Randgold Resources finalized a $5.4 billion merger on Jan. 1.
Barrick and Newmont have been in merger talks in the past, although the companies have operating agreements in Nevada, such as the current one involving the Turquoise Ridge underground mine. Barrick operates the mine and owns 75 percent. Newmont owns the remaining 25 percent and processes Turquoise Ridge ore at its Twin Creeks Mine nearby.
John Dobra, a longtime expert on the mining industry and retired associate economics professor at the University of Nevada, Reno, said in an early February interview with the Elko Daily Free Press that past Newmont-Barrick talks failed because their corporate cultures are too different.
As for the markets, Newmont shares closed Feb. 22 at $36.48, up $1.07, while Barrick shares closed at $13.04, down 28 cents. Goldcorp shares ended at $11.13, down 38 cents.
Bloomberg wrote on Feb. 22 that Barrick had studied the possibility of teaming up with a partner, such as Newcrest Mining Ltd., in a bid for Newmont. Bloomberg reported the chief executive officers of Barrick, Newmont and Newcrest are expected to be at a BMO Capital Markets mining conference next week, where merger talks could dominate the gathering.
Reuters offered comment that the latest idea of the two major gold producers merging “looks like fool’s gold,” in answer to a report from the Globe and Mail that Barrick had an eye on Newmont.
In Newmont’s announcement on the court order, the company reported that the Goldcorp merger would create a combined $265 million in expected annual pre-tax synergies and potential benefits representing value creation over more than $2.5 billion.
The new Newmont Goldcorp expects to produce between 6 million and 7 million ounces of gold over decades with assets on four continents and deliver the highest dividend amount among senior gold producers, according to the Feb. 22 announcement.