The structure of the gold industry has changed with the announcement of a second blockbuster merger in January.

The first was the Barrick Gold Corporation-Randgold Resources combination announced last September. Not to be outdone by Barrick, Newmont announced plans to acquire fellow senior producer Goldcorp in an all-stock deal valued at $10 billion to create the world’s largest gold company.

Like Barrick, Newmont intends to sell non-core mines to focus on a smaller portfolio of larger, higher quality properties. However, the new Newmont will have 21 mines (Barrick has 13), so integrating Newmont with Goldcorp will be a challenge.

That said, Newmont is acquiring an excellent suite of assets at a discount and Goldcorp shareholders will get the quality management they have long been waiting for.

Gold Spot Rate vs. Newmont Mining vs. Barrick Gold vs. Goldcorp

Source: Bloomberg.

About the Author:

Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.