Newmont Mining Corporation
) announced that it has decided to end its merger discussions
Barrick Gold Corporation
). Newmont stated that initially they were hopeful that
combination of the two companies would reap benefits.
However, Newmont realized that the type of constructive and
partnership-oriented relationship necessary for potential
benefits of the integration were not in existence.
As per Barrick, the company had negotiated a term sheet for a
proposed merger between Barrick and Newmont, which was agreed
upon and signed by both parties on Apr 8. Since then, Newmont
went back on its words on three foundational elements - the
location of the head office of the combined company in Toronto,
the identification of any specific assets that would be included
in a spin-off company, and the matters related to the governance
arrangements, especially with respect to the roles and authority
of the Chairman, the Lead Director and the CEO.
However, Newmont said in response that it did not renege on
those terms and talks with Barrick's Co-Chairman on specific
fundamental strategic and structural issues were unproductive
and, hence, a deal could not be reached. While Barrick believed
that its shareholders would have gained from the merger, Newmont
considered staying independent to be the best option for the
company and its stakeholders.
Newmont recently released its first-quarter 2014 results.
Adjusted earnings of 22 cents a share for the quarter slumped
roughly 69% from the year-ago quarter's earnings of 70 cents a
share. However, the results beat the Zacks Consensus Estimate of
On a reported basis, the company posted net income from
continuing operations of $117 million or 23 cents per share in
the quarter, down from net earnings of $314 million or 63 cents
per share a year ago. The bottom line was largely impacted by
declines in average realized gold and copper pricing, offset by
improved production and a stable operating costs.
Newmont's revenues fell nearly 19.4% year over year to $1,764
million in the quarter and missed the Zacks Consensus Estimate of
Newmont currently carries a Zacks Rank #3 (Hold).
Other companies in the gold mining industry worth considering
AngloGold Ashanti Ltd.
Lake Shore Gold Corp.
), both carrying a Zacks Rank #1 (Strong Buy).
BARRICK GOLD CP (ABX): Free Stock Analysis
ANGLOGOLD LTD (AU): Free Stock Analysis
LAKE SHORE GOLD (LSG): Free Stock Analysis
NEWMONT MINING (NEM): Free Stock Analysis
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