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NEM-GG Merger: Newmont’s Special Dividend Announcement

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Special dividend

In a press release, Newmont Mining (NEM) said this one-time special dividend will be paid to Newmont shareholders of record as of April 17, 2019. While Goldcorp (GG) shareholders are scheduled to vote on the deal on April 4, Newmont shareholders are scheduled to vote on April 11.

Part 1

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Addressing shareholders’ concerns

One shareholder complaint regarding the NEM-GG merger was that the potential benefits from the Newmont–Barrick Gold (GOLD) Nevada joint venture would unfairly go to Goldcorp shareholders. Through this special dividend, Newmont intends to address this concern. This dividend would only go to Newmont’s shareholders as “an immediate cash payment for a portion of the synergy potential arising from the Nevada joint venture.”

Potential synergies

Newmont’s CEO, Gary Goldberg, said, “We are pleased to make this special dividend payable to Newmont’s current shareholders in recognition of the potential synergy value of the Nevada joint venture agreement.” As Bloomberg reported, this special dividend has already convinced VanEck’s Joe Foster, who said, “As things stand right now I plan to vote in favor of the Newmont deal.”

Newmont reiterated the value the merger of the two companies would create. Some of the benefits NEM listed were:

  • 27% accretive to NEM’s net asset value
  • 6 million–7 million ounces of steady-state gold (GLD) production per year over the long term
  • the largest gold reserves and resources in the gold sector (GDX)(JNUG)
  • the highest dividend among senior gold producers
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