Newmont Mining Corp. (NEM) - Get Report shares jumped higher Friday amid reports that rival Barrick Gold Corp (GOLD) - Get Report is prepping a hostile takeover bid that would value the mining group at around $19 billion.
Canada's Globe & Mail Newspaper reported Friday that Barrick, the world's biggest gold producer and fresh off a $6.1 billion takeover of Randgold Resources, is looking to buy Newmont and dump some of that company's assets to Australia's Newcrest Mining (NCMGY) as the bullion industry continues to consolidate Last month, Newmont agreed an all-share takeover of Goldcorp (GG) that values its Canadian rival at around $10 billion.
The merger reports followed a stronger-than-expected fourth quarter earnings report for Newmont late Thursday, which saw the miner post a near 8% increasing in gold production over the three months ending in December that helped it earn $214 million, or 40 cents a share, topping the FactSet consensus 25 cents a share.
"We're going through a very detailed process between (Newmont President Tom Palmer) and I with a number of meetings with the Goldcorp team and with our own team as we go through that process," CEO Gary Goldberg told investors on a conference call late Thursday before reports of the Barrick interest surfaced. "So working through that a very detailed rigorous process, and one that's wanting to make sure we get to meet the people and take the proper amount of time as we go through this process."
Newmont shares were marked 3.3 higher in early Friday trading at $36.56 each. Barrick Gold shares were seen 2.7% lower at $12.96 each.
Newmont CEO Goldberg will stay on with the group until the deal with Goldcorp is closed, which the companies hope will happen in the second quarter of this year, but will then retire from the company and make way for current Palmer to serve as CEO of the combined group.
Randgold Resources, an Africa-focused miner, agreed to an all-share merger with Barrick in late September that will create one of the world's biggest commodity groups.
Toronto-based Barrick will own around two-thirds of the combined group, with Randgold's Mark Bristow serving as CEO and Barrick's John Thorton keeping his role as executive chairman.
The newly-created group will have a market value of around $18.3 billion, hold five of the world's ten largest bullion deposits and have the ability to produce around 5.5 million ounces of gold each year.
Spot gold prices have risen around 14% since mid-August, outpacing an essentially flat performance for the U.S. dollar index, a benchmark of the greenback against a basket of six global currencies.
Newmont and Goldcorp mined a collective total of 7.9 million ounces of gold last year, the companies said, and will control 75% of proven gold reserves in North and South America, a figure that could trigger scrutiny from anti-trust authorities in either Canada or the Untied States.