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Newmont-Goldcorp Merger: What to Expect from Combined Company

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Goldcorp’s earnings beat estimates

Goldcorp (GG) reported its fourth-quarter earnings on February 12 after the market closed. It reported adjusted EPS of -$0.07, which beat the consensus estimate by $0.04. Its revenues of $772.0 million, however, missed the analyst estimate by ~7.4%.

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Goldcorp’s milestones

The company achieved significant milestones during the quarter including its first gold pour at its Penasquito’s Pyrite Leach Project in November and commercial production in December. Porcupine’s Borden project got permitting as it advances towards commercial production. GG’s Coffee project also advanced towards late stages of permitting and project engineering. Goldcorp also achieved $250 million of sustainable annual efficiencies by mid-2018.

Among its peers (GDX), Barrick Gold (GOLD) reported mixed operating results with an adjusted EPS of $0.06 in Q4, which beat the consensus estimate of $0.05. It, however, missed the top-line estimates by ~$60 million and reported revenues of $1.9 billion. Newmont Mining (NEM) beat consensus expectations with EPS of $0.40 compared to the consensus estimate of $0.16. The company’s revenues of $2.05 billion also beat the estimate by 9.0%. Kinross Gold (KGC) reported slightly better-than-expected earnings and revenues.

Newmont-Goldcorp merger

On January 14, 2019, Newmont Mining (NEM) and Goldcorp (GG) announced a merger wherein Newmont agreed to acquire Goldcorp in a stock-for-stock transaction valued at ~$10 billion.

The transaction, which is expected to close in the second quarter of 2019, is set to combine Newmont’s 68.5 million ounces and Goldcorp’s 52.8 million ounces, forming the world’s largest asset base. After selling non-core assets, the new company is expected to maintain annual gold production of 6.0 million–7.0 million ounces.

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