Newmont's (NEM) Shareholders Clear Goldcorp Transaction

Newmont Mining Corporation’s (NYSE:NEM) shareholders have voted to approve the authorization and issuance of its common shares with regards to the proposed merger transaction with Goldcorp Inc (GG).

Notably, shareholders of Goldcorp have also voted in favor of the merger on Apr 4, 2019. More than 97% votes were cast in support of the transaction.

Per Newmont, the proposal for issuing shares for the transaction required a majority of votes. The proposal for increasing required authorized common stock also required a majority of outstanding shares. Shareholders of Newmont have approved the increase in authorized common stock with more than 76% of the outstanding shares voting in favor of the proposal. Also, the issuance of shares pursuant to the transaction received more than 98% of the votes cast for the proposal.

The approval from the shareholders of both parties at their respective shareholder meetings satisfied the conditions to Newmont’s earlier announced one-time special dividend of 88 cents per share of common stock. As such, the company will pay the special dividend on May 1, 2019 to Newmont shareholders of record as of Apr 17, 2019.

Also, Newmont has specified that the dividend will be paid to the holders of Newmont’s currently outstanding shares as of the record date and not in respect of shares to be issued related to the proposed Newmont Goldcorp transaction.

Newmont’s shares have lost 10.9% in the past year, against the industry’s 2.1% rise.

The transaction is expected to close in the second quarter of 2019. Post the closure, Newmont Goldcorp will be accretive to Newmont’s net asset value per share by 27% as well as to the combined company’s 2020 cash flow per share by 34%.

Moreover, it will start delivering $365 million in expected annual pre-tax synergies along with supply chain efficiencies and full potential improvements. This represents pre-tax NPV worth $4.4 billion. The company will be able to leverage its combined scale, targeting a profitable gold production in the range of 6-7 million ounces over the long term.

The deal offers an investment-grade balance sheet and financial flexibility to pursue promising projects that are capable of generating a targeted IRR of minimum 15%. It will have the largest gold reserves and resources in the industry, including on a per share basis.

Zacks Rank & Key Picks

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. (TO:KL) , Rio Tinto (LON:RIO) plc (NYSE:RIO) and Materion Corporation (NYSE:MTRN) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 84.6% in the past year.

Rio Tinto has an expected earnings growth rate of 20.1% for the current year. The company’s shares have gained 15.3% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 10.9% in a year’s time.

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