Newmont to buy Goldcorp in $10b deal

ONTARIO, Jan 14 (Reuters): Newmont Mining Corp said on Monday that it would buy smaller rival Goldcorp Inc in a deal valued at $10 billion, creating the world's biggest gold producer by output.

The deal is the second high-profile merger in the mining industry since Barrick Gold Corp agreed to buy Randgold Resources Ltd in September last year to cut costs.

The gold mining industry has come under fire from investors in recent months for poor management of capital. This combined with falling gold reserves and higher extraction costs have prompted miners to look for cost efficiencies.

"The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels," Goldcorp Chief Executive Officer David Garofalo said in a statement.

The combined company is expected to produce 6-7 million ounces of gold over the next ten years. In 2017, Newmont produced 5.3 million ounces of gold, while Goldcorp mined 2.6 million ounces.

Newmont will offer 0.3280 of its share and $0.02 for each Goldcorp share. Based on Newmont's Friday close, translates to $11.46 per share, a premium of about 18 per cent to Goldcorp's Friday close on the New York Stock Exchange.