Newmont grabs Goldcorp in $10B deal that creates world's top gold miner

Canada's Goldcorp to be swallowed by Newmont in $10-billion all-stock deal

Canada's Goldcorp to be swallowed by Newmont in $10-billion all-stock deal

United States gold giant Newmont Mining (NYSE:NEM) took a page out of Barrick's book by announcing that is buying Canada's Goldcorp (TSX:G) (NYSE:GG) in a $10 billion-deal that would create the world's largest producer by output, challenging Barrick's recently cemented supremacy.

Newmont's move proves Barrick Gold Corp.'s new chief executive officer words prophetical.

Goldcorp shares surged in USA pre-market trading, climbing 13 per cent to US$10.96 as of 6:25 NY.

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Goldcorp shareholders will receive 0.328 of a Newmont share for their stock.

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. Investors have punished the industry in recent years and Newmont shares are about half the value from a peak in 2011.

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.

Vancouver-based Goldcorp's stock has been stuck in a tailspin as it has dealt with a slew of operational issues over the past few years, including gold grade challenges at some of its biggest mines.

The combined company is expected to produce 6-7 million ounces of gold over the next ten years. That deal had a final value of about US$9.9 billion when it closed in 2006, according to data compiled by Bloomberg.

As part of the transaction, Newmont has committed to sell between $1 billion to $1.5 billion worth of assets over the next two years.

In a press release, Newmont said the combination with Goldcorp will generate $100-million a year in cost savings. 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.

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.

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