US-based gold and copper producer Newmont Mining said that its board has rejected Canadian gold mining giant Barrick Gold’s $18bn worth merger proposal citing that it is not in the best interests of the company’s shareholders.
Instead, Newmont Mining said that its previously announced $10bn merger with Canadian gold miner Goldcorp represents a superior value creation opportunity than the offer from Barrick Gold.
The company termed Barrick Gold’s offer as an “unsolicited, negative premium proposal”.
Newmont Mining claimed that its acquisition of Goldcorp will create long-term value by means of an unmatched portfolio of world-class operations, projects, exploration opportunities, reserves and talent.
It entered into a merger agreement with Goldcorp in January 2019 in a move to form a major gold company in the world, called Newmont Goldcorp.
The gold and copper producer said that Barrick’s portfolio has various unfavorable and high-risk jurisdictions with several ongoing and major operational and sustainability problems. In contrast, it said that Newmont Goldcorp’s assets will be in favorable mining jurisdictions and prolific gold districts across four continents.
Newmont Mining CEO Gary Goldberg said: “The combination with Goldcorp is significantly more accretive to Newmont’s shareholders on all relevant metrics compared to Barrick’s proposal, even when factoring in Barrick’s own synergy estimates.
“Realizing value through Barrick’s proposal for Newmont’s shareholders hinges entirely on a new management team that lacks global operating experience and is only two months into its own transformational integration.”
However, Newmont Mining said that it is interested in forming a joint venture (JV) with Barrick Gold in Nevada, US. In this regard, the US company has submitted a JV proposal to the Canadian miner.
The JV, proposed to be created from the combination of the respective companies’ Nevada operations, will see Barrick Gold hold an economic interest equal to 55% with the remaining 45% to be held by Newmont Goldcorp.
Barrick Gold president and CEO Mark Bristow said: “Newmont’s latest proposal is essentially based on the stale and convoluted process that foundered previously.
“As usual, it comes with unrealistic preconditions including swapping the chairmanship and the leadership of the JV. Experience has shown us that JVs only work well when the majority owner is also the operator.”
Earlier this month, Newmont Mining secured approval from the Canadian Competition Bureau for its proposed acquisition of Goldcorp. Post-acquisition, the enlarge company Newmont Goldcorp is expected to have a steady, profitable gold production targeting 6-7 million ounces over a decades-long time horizon.