Newmont's move proves Barrick Gold Corp.'s new chief executive officer words prophetical. The newly formed Newmont Goldcorp shares would look to list on the Toronto Stock Exchange.
The two massive gold transactions have the potential to boost investor interest in an industry that has fallen out of favour after years of weak metal prices, dubious investments and failed deals.
This is the second huge M&A deal in the global gold sector in the past few months.
Newmont and Goldcorp were "clearly not willing to sit back and let Barrick take the limelight", said Kieron Hodgson, a natural resources analyst at Panmure Gordon in London. When the gold price was trading at much higher levels, takeover premiums in the 30 to 40 per cent range were common in the industry.
Newmont will offer 0.3280 of its share and $0.02 for each Goldcorp share.
The combined company, which will be called Newmont Goldcorp, will mine in the Americas, Australia and Ghana, producing between 6 and 7 million ounces of gold annually over the next ten years and beyond, the parties said. In 2017, Newmont produced 5.3 million ounces of gold, while Goldcorp mined 2.6 million ounces. That deal had a final value of about US$9.9 billion when it closed in 2006, according to data compiled by Bloomberg.
Newmont and Goldcorp said they will 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. It has also promised initial cost savings of $100 million a year.
"I can see a new wave of mid-tier producers being spawned from assets deemed sub-economic by the two 'giants, '" said Hodgson.
Goldberg, who has lead Newmont since 2013, will remain CEO until the deal and integration of the two companies is complete - likely in the fourth quarter - after which he will hand over to Chief Operating Officer Tom Palmer.