Canadian gold mining giant Barrick Gold has proposed to acquire US-based gold and copper producer Newmont Mining in an all-stock deal worth around $18bn.
According to Barrick Gold, its proposed combination with Newmont Mining will create a major gold company in the world with revenues of about $15.6bn. The proposed merger could unlock over $7bn net present value (pre-tax) of real synergies, claimed the Canadian mining giant.
The company further said that most of the revenue will come from their highly complementary assets located in Nevada, including its own significant mineral endowments and the US mining company’s processing plants and infrastructure.
The enlarged company would have total gold reserves of 141 million ounces and total gold resources of 275 million ounces.
Barrick Gold President and CEO Mark Bristow said: “The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with the largest portfolio of Tier One gold assets and the highest level of free cash flow to drive future growth and support sustainable shareholder returns, run by a management team with an unparalleled record of delivering value.”
The Canadian firm proposes to issue 2.5694 of its shares for each share of Newmont Mining. In the combined entity, Barrick Gold’s shareholders would own around 55.9% while Newmont Mining’s shareholders would own about 44.1%.
Barrick Gold said that its proposal is significantly superior than Newmont Mining’s $10bn acquisition of Canadian gold miner Goldcorp, which was announced last month. Further, the company has asked Newmont Mining’s shareholders to vote down the Goldcorp transaction.
Newmont Mining has turned down Barrick Gold’s proposal saying that it ignored risks and overstated rewards.
The company, in a statement, said: “Newmont has analyzed a potential combination with Barrick, whose asset portfolio has changed significantly since 2014, including as a result of the merger with Randgold seven weeks ago and its ongoing integration process.
“Newmont has previously determined that Barrick’s risk and return profile is inferior on many fronts, including factoring Barrick’s comparatively ineffective operating model, poor track record on delivering shareholder returns and unfavorable jurisdictional risk.”
In early January, Barrick Gold completed a previously announced all-stock acquisition of Mali-focused gold mining company Randgold Resources worth around $18.3bn.