The Alain Review:Portfolio Manager and Head of Mining from Finance SA Alain Corbani takes a look at the latest news from the commodities market. Follow Alain’s series HERE.
Barrick Gold Corp. acquiring Randgold Resources Ltd. in September 2018. Today Newmont Mining Corp. announcing its intention to acquire Goldcorp Inc. to become the top gold miner with a market capitalization of US$26 billion.
The deal announced means Newmont will exchange 0.328 of a share and two cents in cash for each of Goldcorp’s outstanding common shares. This equates to $11.46 per share, giving a premium of approximately 18% on Goldcorp’s closing price on Friday on the New York Stock Exchange.
If and when the latter merger closes the two newcos will weigh 34% of the FTSE Gold Mines Index while gold is trading south of a single point from its golden cross sitting at US$1248.
This is NOT a coincidence. Of course, bigger is not better but this is not the point. A more dovish Federal Reserve along with inflation anchored in the economical landscape should cement the favorable conditions to lift the price of gold. The stars are aligned for a successful year in 2019.
Head of Mining & Manager of the Global Gold and Precious Fund
Finance SA, Paris, France
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