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Newmont to acquire Goldcrop for $10 billion

In a deal that will create the world’s largest gold producer, Newmont has agreed to buy its US-based rival Goldcorp, as consolidation increases in the sector.

Newmont Mining Corp announced that it will acquire its smaller rival Goldcorp in a deal worth around $10 billion.

The acquisition will create the world’s largest gold producer by output and comes hot on the heels of another major deal in the sector, notably Barrick Gold’s decision to acquire Rangold Resources, which was announced in September last year.

This combination will create the world’s leading gold business with the best assets, people, prospects and value-creation opportunities,’ Newmont CEO Gary Goldberg said.

‘We expect to generate up to $100 million in annual pre-tax synergies, with additional cost and efficiency opportunities that will be pursued through our proven full potential continuous improvement program.’

‘The combination is expected to be immediately accretive to Newmont’s net asset value and cash flow per share,’ he added.

Gold producers consolidate to improve cost efficiencies

The gold mining industry has struggled to satisfy investors, who have become frustrated with its mismanagement of capital over the last few months.

The sector has also had to ensure declining gold reserves and rising costs of extraction for the precious metal.

This concoction of headwinds has spurred many players in the industry to look at cost-savings measures and improve overall efficiencies of doing business, with consolidation viewed as a simple solution for some.

‘This combination creates the world’s premier gold company,’ Goldcorp President and CEO David Garofalo said. ‘In addition to the depth and quality of Newmont Goldcorp’s operations, projects, exploration properties and Reserves, the combined company’s assets will be centred in the world’s most favourable and prospective mining jurisdictions and gold districts.’

The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels, and both teams are fully committed to delivering on the transaction’s value proposition for all of our stakeholders,’ he added.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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