New­mont ac­quires ri­val Gold­corp

Bangkok Post - - WORLD BUSINESS -

LON­DON: New­mont Min­ing Corp will buy ri­val Gold­corp Inc in a deal val­ued at $10 bil­lion, cre­at­ing the world’s largest gold miner and ce­ment­ing a re­turn of M&A to the in­dus­try. The trans­ac­tion comes just three months after Bar­rick Gold Corp’s move to buy Rand­gold Re­sources Ltd in a $5.4 bil­lion trans­ac­tion, which in­stantly spurred spec­u­la­tion that ri­vals would have to re­spond. Gold­corp shares surged in US pre­mar­ket trad­ing, climb­ing 13% to $10.96 as of 6:25 a.m. in New York. New­mont shares slipped 3%. The two huge gold deals have the po­ten­tial to spark in­vestor in­ter­est after the in­dus­try lost favour fol­low­ing years of lack­lus­tre bul­lion prices, bad in­vest­ments and dis­as­trous deals. Just two weeks ago, Mark Bris­tow, the new chief ex­ec­u­tive of­fi­cer of Bar­rick, said the in­dus­try “is head­ing for ir­rel­e­vance un­less there are ma­jor changes.’’ “New­mont and Gold­corp are clearly not will­ing to sit back and let Bar­rick take the lime­light,” said Kieron Hodg­son, a nat­u­ral re­sources an­a­lyst at Pan­mure Gor­don in Lon­don. New­mont will pay 0.3280 of its own shares for each Gold­corp share, a premium of 17% to the weighted av­er­age share price from the last 20 days. New­mont also plans to pay two cents for each Gold corp share. The deal will cre­ate a miner that ex­ceeds Bar­rick-Rand­gold in scale, pro­duc­ing about 7.9 mil­lion ounces of gold a year. And at about $10 bil­lion, the trans­ac­tion will ri­val Bar­rick’s pur­chase of Placer Dome Inc as the gold-in­dus­try’s big­gest takeover. That deal had a fi­nal value of about $9.9 bil­lion when it closed in 2006, ac­cord­ing to data com­piled by Bloomberg. New­mont and Gold­corp said they would sell up to $1.5 bil­lion in as­sets over the next two years, echo­ing a sim­i­lar Bar­rick pledge to con­cen­trate on the best-per­form­ing mines. The prom­ise of un­load­ing as­sets will have reper­cus­sions for the in­dus­try as a host of mines are likely to be put up for sale. Ad­di­tion­ally, the two big deals will add pres­sure to other gold min­ers such as Kin­ross Gold Corp and An­gloGold Ashanti Ltd, which have missed out on the sud­den deal rush. “I can see a new wave of mid-tier pro­duc­ers be­ing spawned from as­sets deemed sub-eco­nomic by the two gi­ants,’’ said Hodg­son.

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