US gold giant Newmont Mining (NYSE:NEM) has cleared one of the regulatory hurdles for its planned mega- merger with Canada’s Goldcorp (TSX: G), a combination that would create the world’s largest producer by output, challenging Barrick’s recently cemented supremacy.
The Denver-based gold miner said the Canadian Competition Bureau had okayed the $10-billion stock-for-stock transaction and added it’s now working with other regulatory agencies to secure the rest of the needed approvals.
The companies aim to close the deal in the second quarter, which will see the arrival of the combined company, to be called Newmont Goldcorp. The new miner will have operations in the Americas, Australia and Ghana, producing between 6 and 7 million ounces of gold annually over the next ten years and beyond. In contrast, the new Barrick has targeted between 5.1 and 5.6 million ounces for this year.
The merged miner will be led by Newmont’s Chief Executive Officer Gary Goldberg, who is retiring by the end of the year. Tom Palmer, the company’s current chief operating officer, will then take over as the CEO.
Newmont has said it expected to gain $100 million of savings from synergies between the two companies once the deal closed, by relocating Newmont’s North American headquarters from Elko to Vancouver, and by optimizing Goldcorp’s assets.
Vancouver-based Goldcorp, the world’s third largest bullion producer by market value, has underperformed its peers in recent years. In late October, The it lost close to a fifth of its market value in a single day after reporting weak production, climbing costs and a decline in reserves.
The company’s shares have been in a long-term tailspin, but were trading 3.8% higher Tuesday at $14.83 on the Toronto Stock Exchange, down from more than $54 in 2011. Since the planned merger with Newmont was unveiled, the stock has gained 7.2%.
Newmont shares were up almost 3.5% in New York on Tuesday, trading at $34.39 by noon local time. The stock has climbed around 8.2% since the deal was announced last month.
Gold prices were up Tuesday and hit their highest level in nearly 10 months, lifted by safe-haven buying as investors monitored continuing trade talks and political uncertainty in Europe.
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