Newmont and Goldcorp led mergers and acquisitions in the mining sector in the world in 2019, according to the Mining Chamber of Mexico (Camimex).
The value of M&A activity in the gold industry grew by 45% year-on-year in 2019, to $ 18.2 billion, although below the maximum figure it reached in 2010, with $ 32.2 billion.
According to the report by the English firm Metals Focus, most of this value corresponds to the merger between Newmont and Goldcorp, which gave rise to the world’s largest gold miner and represented 68% of the total operations held during the last year.
Newmont and Goldcorp
Generally speaking, mining companies, especially those that are publicly traded, spent more in 2019 than in 2018 for both their organic growth and mergers and acquisitions.
On January 14, 2019, Newmont entered into a definitive agreement to acquire all of Goldcorp’s outstanding common shares.
Then, on April 18, 2019, Newmont closed its acquisition of Goldcorp after receiving all regulatory approvals and approval by Newmont and Goldcorp shareholders of the resolutions at the shareholders’ meetings on April 11 and 4, 2019, respectively, for total cash and non-cash of $ 9.456 million in a primarily stock transaction.
The combined company is known as Newmont Corporation, and continues to be listed on the New York Stock Exchange and listed on the Toronto Stock Exchange.
Fusions and acquisitions
Excluding mega-mergers, M&A deals in the gold sector reached $ 5.9 billion, mostly from the liquidation of non-strategic assets by some companies.
According to Camimex, the number of agreements also increased slightly, from 86 registered in 2018 to 89 registered in 2019.
Despite the significant number of high-value transactions that have taken place in recent years, there are expectations that activity will continue to be intense, this due to operations related to smaller companies, as well as the acceleration of divestments in assets non-strategic during the process of restructuring the portfolios of the companies, taking advantage of the increase in the price of gold.
Metals Focus analysts expect that, among mid-sized producers, the corporate strategy will focus on increasing their size through consolidation and the acquisition of assets discarded by large miners.
Latin America recorded a number of major merger and acquisition (M&A) deals in 2019, with industry experts forecasting further consolidation next year.
Mergers can also provide increased liquidity, while reducing overhead, as shown in the proposed transaction between Leagold Mining and Equinox Gold.
The size of the company, the diversity of the portfolio and the strong liquidity are some of the factors to attract investments.