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Economic News from Sunday, February 10, 2019
Source: clbadfmonline.com
2019-02-10
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Newmont Mining Corporation (NYSE: NEM) and Goldcorp Inc. (NYSE: GG, TSX: G) announced the closing of a definitive agreement under which Newmont will acquire all of the outstanding common shares of Goldcorp as part of a stock for stock. transaction valued at $ 10 billion. Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 Newmont shares, representing a 17% premium based on the company's weighted average 20-day stock price.
The agreement will involve two gold industry leaders at Newmont Goldcorp to create an unparalleled portfolio of operations, projects, exploration opportunities, reserves and people in the gold mining sector. Newmont Goldcorp's world-clbad portfolio will include operating badets in favorable jurisdictions, an unprecedented portfolio of projects and exploration potential in the world's most potential gold districts. In addition to providing shareholders with the largest gold reserves per share, Newmont Goldcorp will offer the highest annual dividend of any major gold producer.
"This combination will create the world's leading gold business with the best badets, people, prospects and opportunities for value creation," said Gary Goldberg, CEO of Newmont. "We have a proven strategy and a disciplined implementation plan to take full advantage of the combination, including an outstanding pool of talented professionals in the mining sector, a stable and profitable gold production of six to seven million dollars." ounces over several decades, the largest in the industry. a gold reserve and gold resource base; and a major exploration project and pipeline. Our cultures are well aligned, with firm commitments to reduce damage, inclusion and diversity, as well as leading environmental, social and governance performance. We expect to generate up to $ 100 million of pre-tax annual synergies, with additional cost and efficiency opportunities that will be pursued through our proven program of continuous improvement Full Potential. The combination is expected to have an immediate effect on Newmont's net badet value and cash flow per share. We continually explore opportunities to increase our performance and this combination represents the most promising way to deliver superior and sustainable value to our shareholders, employees, host countries and communities. "
Newmont Goldcorp's reserves and resources will be the largest gold sector and will be located in favorable mining jurisdictions in America, Australia and Ghana, representing approximately 75%, 15% and 10%, respectively. Newmont Goldcorp will also prioritize project development based on returns and risks, while targeting between $ 1 billion and $ 1.5 billion in divestitures over the next two years to optimize gold production at a stable level. stable from six to seven million ounces a year. Backed by stable, long-term, profitable production and a strong balance sheet, Newmont Goldcorp will generate robust free cash flow and the financial flexibility it needs to finance the development and exploration of projects. the coming decades.
"This combination creates the first gold company in the world," said David Garofalo, President and CEO of Goldcorp. "In addition to the depth and quality of Newmont Goldcorp's businesses, projects, exploration properties and reserves, the combined company's badets will be concentrated in the world's most favorable and promising mining jurisdictions and gold districts." . The combination of Goldcorp and Newmont with strategic reasons is extremely convincing on many levels. Both teams are fully committed to realizing the value proposition of the transaction for all our stakeholders. Newmont Goldcorp will be one of Canada's largest gold producers and will have its regional office for North America in Vancouver. He is expected to oversee more than three million ounces of the total annual gold production of the combined company. "
Strategic logic
The Newmont and Goldcorp Association will create the world's first gold company offering shareholders and other stakeholders:
• Experienced professionals in the management and mining sector with proven experience in maximizing value by offering long-term, profitable gold mining activities
• Unprecedented gold price effect given the size of the combined company (gold production data 2017: Newmont = 5.3 million ounces, Goldcorp = 2.6 million ounces)
• A world-clbad portfolio of gold operations and projects in favorable jurisdictions
• Stable and profitable gold production, targeting 6 to 7 million ounces over a multi-decade horizon
• Industry recognized leadership in environmental, social and governance performance
• A sustainable and targeted annual dividend of US $ 0.56 per share 1, the highest among leading gold producers
• A solid, investment-grade balance sheet
• An unprecedented pipeline of projects on four continents
• Exploration opportunities in the world's most promising gold districts
• The largest base of gold reserves and gold resources in the area
Structure and succession of long-term directors
Following the amalgamation, Newmont Goldcorp's management will feature experienced and experienced mine and mining leaders and mines, both at the board and management levels, as well as diverse and high-performing teams at the sites. regional and operational levels of the combined company.
The Newmont Goldcorp management team will be named on the basis of "Top Talents", Gary Goldberg as Chief Executive Officer and Tom Palmer as President and Chief Operating Officer.
Building on the wealth of Newmont Goldcorp's global talent pool, the board will continue to focus on strategic leadership development, sound and thoughtful succession planning, and smooth leadership transitions. . As part of a well-ordered and orderly succession process, Mr. Goldberg and the Newmont Board of Directors engaged in discussions with the CEO in early 2019. In October 2018 , the Company also announced the promotion of Mr. Palmer to the position of President and Chief Operating Officer.
To ensure a smooth and successful combination, Mr. Goldberg agreed to lead Newmont Goldcorp until the closing of the transaction and the integration of the two companies. The Company expects this process to be substantially completed in the fourth quarter of 2019, when Mr. Goldberg plans to retire and Mr. Palmer will become President and Chief Executive Officer.
• The Board of Directors will be comprised of directors from Newmont and Goldcorp, with Noreen Doyle as President and Ian Telfer as Vice President.
• The Goldcorp office in Vancouver, Canada, will become the Newmont Goldcorp regional office in North America.
• The Newmont Goldcorp Regional Office in South America will be located in Miami, United States; the Australian Regional Office will be in Perth; and the regional office for Africa will be in Accra, Ghana
• Newmont Goldcorp will be a Delaware corporation headquartered in Colorado, United States.
• Newmont Goldcorp Shares will trade on the New York Stock Exchange under the ticker symbol NEM and should be listed on the Toronto Stock Exchange (TSX) after the closing of the transaction.
Terms of transaction
• Newmont acquires all outstanding shares of Goldcorp at an exchange rate of 0.3280 for a Newmont share and $ 0.02 for each Goldcorp share
• Goldcorp equity value of $ 10 billion, with premiums, and $ 12.5 billion enterprise value
• A 17% premium based on the 20-day VWAP stock prices of Newmont and Goldcorp as of January 11, 2019
• The shareholders of Newmont and Goldcorp will own approximately 65% and 35% respectively of the combined entity.
• The transaction will be implemented through a court-approved plan of arrangement under the Business Corporations Act (Ontario).
• The agreement contains customary provisions for the protection of transactions, including mutual non-solicitation clauses and the right to match superior proposals.
• Under certain circumstances, Newmont would be entitled to a $ 350 million break-up fee (3.5% of Goldcorp's equity value) and Goldcorp would be entitled to a break-up fee of $ 650 million ($ 3.5 million). % of Newmont's equity value).
• Each of the directors of Goldcorp and Newmont and certain members of the management team have entered into voting support agreements to vote their shares in favor of the transaction.
Way to close
The boards of directors of both companies unanimously approved the transaction, including in the case of Goldcorp, on the unanimous recommendation of a special committee of Goldcorp's independent directors. The transaction is expected to close in the second quarter of 2019. The closing of the transaction is subject to the approval of the shareholders of both companies. regulatory approvals in a number of countries, including the European Union, Canada, South Korea and Mexico; and other customary closing conditions.
Benefits for Canada
The creation of Newmont Goldcorp ensures the participation of the Canadian gold sector in a world-leading natural resource company, which operates responsibly, invests in the long-term success of its properties and has the financial capacity to explore and develop the next generation of gold mines. As part of this combination, Newmont Goldcorp plans:
• Preserve jobs in Canada by designating Goldcorp's current headquarters in Vancouver as the Newmont Goldcorp regional office in North America – this regional office will oversee all Newmont Goldcorp properties in Canada and the United States.
• The Vancouver office will oversee operations in North America with combined gold production of more than three million ounces per year, more than three times Goldcorp's current Canadian gold production.
• Make the Newmont Goldcorp Vancouver office the basis for some of Newmont Goldcorp's global functions and centers of excellence, including global monitoring of relations with Aboriginal communities.
• Maintain a strong Canadian presence on the Newmont Goldcorp Board of Directors and the Newmont Goldcorp Canadian Properties Branch
• honor Goldcorp's commitment to Aboriginal communities to ensure that their interests are recognized and protected
• Seeking to list Newmont Goldcorp shares for trading on the TSX
• Make new investments in a reinvigorated exploration program in Canada
• Provide permanent and long-term jobs for highly skilled jobs on Newmont Goldcorp properties in Canada
• Maintain a commitment to environmental sustainability and the health and safety of its workers.
• Continue to make contributions to organizations in communities where Newmont Goldcorp operates to support charitable, social, recreational and community development programs.
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