Why the Newmont-Goldcorp blockbuster deal is in sharp contrast to the Barrick-Randgold merger – by Gabriel Friedman (Financial Post – January 15, 2019)


Newmont has higher a dividend, safer locations than Barrick and will invest in Canada, but its stock still fell. Perhaps copper-gold mining will help it shine

As Newmont Mining Inc.’s chief executive Gary Goldberg hawked a proposed $10 billion all-stock purchase of Vancouver-based Goldcorp to his investors on Monday, he and his team emphasized massive gold production, a focus on mines in the safest jurisdictions in the world and continued investment in Canada.

That drew a stark contrast to chief rival Barrick Gold, which also recently completed a mega-merger, and has reduced its presence in Canada and grown in more risky jurisdictions. “This is not a deal we have to do, it’s a deal we want to do,” Goldberg told investors.

But while Barrick’s share price surged after announcing its deal, Newmont’s stock had declined 8.89 per cent to close at US$31.78 on Monday afternoon.

Barrick and Newmont have long competed to be the largest gold producer in the world, and now both have turned to mega-mergers to expand their hulking profiles. But the deals each company struck reveal differences in strategy that are likely to become more apparent as they confront the challenges of continuing to grow while producing millions of ounces of gold per year.

“I can’t see why Newmont did it,” said Ted Hirst, a managing director of investment banking at Cannacord Genuity. “Their strategy has been very sound. I guess what they’re saying now is bigger is linked towards better.”

For the rest of this article: https://business.financialpost.com/commodities/mining/giant-gold-deals-create-giant-miners-but-divide-investors?video_autoplay=true