ELKO — Newmont Mining Corp.’s Nevada mining operations are expected to continue as usual even after the company acquires Goldcorp Inc. The $10 billion transaction will result in the formation of Newmont Goldcorp.
“This combination will create the world’s leading gold business with the best assets, people, prospects and value-creation opportunities,” said Gary Goldberg, Newmont’s CEO, in a statement.
The companies entered into a definitive agreement Jan. 14 for Newmont to acquire all the outstanding common shares of Goldcorp in a stock-for-stock transaction valued at $10 billion.
The transaction is expected to close in the second quarter of 2019, pending regulatory and shareholder approval.
On the New York Stock Exchange, Newmont’s stocks closed at $31.78, down 8.89 percent, on Jan. 14; Goldcorp closed at $10.38, up 7.12 percent.
Moody’s Investor Services stated that it saw the transaction as “providing solid benefit to Newmont over the medium to longer term.”
The Newmont-Goldcorp agreement is the second recent high profile merger in the mining industry. Barrick, another mining sector leader with assets in Nevada, merged with Randgold Resources and began trading shares of the new company Jan. 2.
Combined portfolio To the Newmont Goldcorp agreement, Goldcorp brings four operating mines in Canada, three operational mines and joint ventures in Argentina, Chile, the Dominican Republic and Mexico, along with dozens of exploration projects. Newmont has 12 operating mines in the United States, South America, Ghana and Australia.
“Goldcorp’s board and management team believe we can maximize the full value of our future by combining with another industry leader — Newmont,” said Goldcorp’s president and CEO, David Garofalo.
Collectively, the assets are expected to establish the combined company as a leading gold producer, generating a target 6 million to 7 million ounces of gold from four regions. Newmont produced 5.3 million ounces of gold in 2017, and Goldcorp produced 2.6 million ounces.
The combined company will also have the opportunity to mine silver, zinc and copper.
“Newmont Goldcorp will be able to leverage its scale and operational expertise to unlock value,” Goldberg said in a webcast.
Impact on Nevada
Newmont Goldcorp will continue to headquarter in Colorado, and the North American regional office will be relocated from Elko to Vancouver, Canada. The regional office will oversee the combined company’s Canada and other North America operations, and a handful of leadership positions will move to Canada.
“Our operations here in Nevada and Colorado are significant so we’ve really got two countries with quite significant operating assets,” said Andrew Woodley, regional senior vice president of Newmont North America operations. “We’ll need to work over the coming months to define how best we support those from a shared service and function support.”
The Elko office will remain operational but be renamed, while Newmont’s Nevada and Colorado operations “will continue as usual,” Woodley said. “It’s business as usual working safely to deliver our plans.”
The transaction increases Newmont’s business in ounces and earnings while opening opportunities for synergies between companies.
“Along the way, that presents lots of opportunities for the people within both companies to learn from each other and grow and share best practices so we can leverage and develop all our assets across the globe,” Woodley said.
To maintain the goal of producing 6 million to 7 million ounces of gold, Woodley said the combined company “will see over time how the mix of our production profile around the world sits,” but “there are no eminent expected changes with that.”
The head of Newmont’s North America operations said that despite some employees’ understandable apprehensions about the change, “people can see that it’s great to be part of a business that’s growing.”
Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share, which represents a 17 percent premium based on the companies’ 20-day volume weighted average share prices.
Newmont shareholders will own approximately 65 percent of the company, and Goldcorp shareholders will own about 35 percent.
The combined company is expected to provide shareholders the largest gold reserves per share and highest annual dividend among senior gold producers, Newmont shared in a news release.
“This combination creates the world’s premier gold company,” Garofalo said.
Tom Palmer, Newmont’s president and chief operating officer, is expected to lead Newmont Goldcorp as president and CEO after Goldberg’s retirement in late 2019. Goldberg said the company “will continue to have a proven leader.” The board will be made up of Newmont and Goldcorp directors.
Newmont Goldcorp’s South America regional office will be in Miami, the Australia regional office in Perth; and the Africa regional office in Accra, Ghana.
Newmont Goldcorp expects to employ a workforce of about 28,000 people worldwide. Newmont’s North American workforce totals about 5,000 employees and contractors, and the combined North American workforce is expected to total 10,000 employees.
After the transaction, shares will be traded on the New York Stock Exchange using the ticker symbol NEM. The company is expected to be listed for trading on the Toronto Stock Exchange after the transaction closes.
“For nearly 100 years, Newmont has been recognized as one of the world’s premier mining companies,” Goldberg said in the webcast, “and today with the combination of Goldcorp we are in a position to continue leading the sector in profitability and responsibility for the next century.”