Newmont Mining Corp. shareholders on April 11 approved the proposed merger with Goldcorp Inc., clearing the way for the creation of Newmont Goldcorp.
“We thank Newmont’s shareholders for their overwhelming support for this compelling value creation opportunity as we build the world’s leading gold company,” Newmont Chief Executive Officer Gary Goldberg said in an announcement after the vote.
Goldcorp issued a statement that the company welcomed the favorable shareholder vote for the merger. Goldcorp shareholders will receive 0.328 of a Newmont share plus 2 cents in cash for each share they own when the companies combine.
Newmont and Goldcorp say the nearly $10 billion deal should be completed by the end of this quarter, June 30, but “obviously will hope to close a lot sooner than that,” Newmont’s group executive for corporate communications, Omar Jabara, said April 11. “We don’t have every single clearance at this point, so we don’t want to set expectations for sooner.”
Newmont received a 98 percent vote in favor of issuing the shares “to be able to basically acquire Goldcorp shares,” which required a simple majority of shares, so not everyone voted, Jabara said.
Separately, more than 76 percent voted to increase the number of outstanding Newmont shares. This action required that a majority of outstanding shares be in favor no matter whether the shareholders voted, he said.
Goldcorp voters overwhelmingly approved the merger on April 4, so Newmont reported the votes by the shareholders of both companies meet the criteria for a one-time special 88-cent dividend to be paid for Newmont shareholders.
Newmont offered the dividend as additional incentive to entice its shareholders to approve the proposal to acquire Goldcorp. The dividend will be paid on May 1 to shareholders of record as of April 17.
Newmont shares in afternoon trading April 11 were at $35.90, down 37 cents. Goldcorp shares were at $11.48, down 12 cents.
Newmont’s headquarters in Greenwood Village, Colo., will be corporate headquarters for the new Newmont Goldcorp, but North American offices will move from Elko to Vancouver, Jabara said. Goldcorp is based in Vancouver.
The merger is expected to create $365 million in synergies with gold mines on four continents.
Newmont Goldcorp also expects to produce between 6 million and 7 million ounces of gold in upcoming years, making it the world’s largest gold producer. Barrick, which acquired Randgold Resources on Jan. 1, is currently the largest.
Newmont kept its focus on the deal with Goldcorp even when Barrick Gold Corp. proposed a Barrick-Newmont merger instead that would leave Goldcorp out. Barrick later dropped its merger push against Newmont in favor of a joint venture of the two companies in Nevada.
Barrick will operate the gold mines in Nevada now owned by Newmont under the joint venture that will be 61.5 percent Barrick and 38.5 percent Newmont. The companies are finalizing the joint venture agreement now.
Although there was earlier speculation in the media that $600 million in notes could be a snag for completing the Barrick-Newmont joint venture, Jabara said the notes tied to Nevada operations and including language regarding asset transfers won’t be a problem for the JV agreement.
“Our agreement with Barrick is that those notes aren’t liable to Barrick. The JV won’t be liable to pay for those notes,” he said. “The assets will get transferred free and clear of any debts.”
Newmont issued a news release April 10 that the company extended the expiration date for solicitation of consents regarding the $600 million in notes due in 2035 to 5 p.m. New York time on April 11. The solicitation of consents had been due to expire April 10.
With the acquisition of Goldcorp, the new Newmont Goldcorp with have joint ventures with Barrick in Nevada, and at the Pueblo Viejo gold mine in the Dominican Republic, which will be 40 percent Newmont Goldcorp, and at the Norte Abierto development project in Chile, 50 percent each, as well as at the Kalgoorlie Consolidated Gold Mine in Australia, 50 percent each.
Jabara said Newmont Goldcorp also will have two joint ventures with Teck Resources Ltd. These include the Galore Creek asset in British Columbia and the NuevaUnion project in Chile.
He also said in a phone interview April 11 that Newmont Goldcorp plans to spend money on exploration at current Goldcorp assets.
“Goldcorp dialed back on exploration in recent years,” Jabara said.