Hold: Newmont Goldcorp Corp. (NEM)
From Adrian Day’s Global Analyst
Updated from Wall Street’s Best Investments 795, July 19, 2017
Goldcorp Inc. (GG) has been acquired by Newmont Mining (renamed Newmont Goldcorp Corp, NEM). Shareholders voted in favor of the acquisition, though it was disappointing that, notwithstanding all the noise about excessive payouts, when given the opportunity, few shareholders seem to care enough to use their vote.
Goldcorp shareholders receive 0.328 of a share of Newmont (as well as a final 2 cent dividend). As a final insult for Goldcorp shareholders, Newmont paid its shareholders an extra 88 cent bonus before the merger.
Though, as Goldcorp shareholders, we did not like the transaction, and do not see any synergies in the combination, now, as shareholders of the merged Newmont, we are holding for now.
There will be some overhead savings, and more importantly, Newmont may be able to improve performance at GG’s underperforming mines. Moreover, two of GG’s larger mines, Penasquito and Eleonore, are turning and should see improved operations going forward in any event. Newmont will divest non-core mines, improving the balance sheet, though this process will take years. Lastly, if the gold price improves and generalist investors return to the gold space, Newmont will be a stock they look to.
We are holding for now, though watching progress carefully.
Adrian Day, Adrian Day’s Global Analyst, www.adriandayglobalanalyst.com, 410-224-8885, April 20, 2019