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Thursday, 29th December 2005 (4364 views)

Candian gold miner Goldcorp is being talked up as the "clear winner" of Barrick's $11.8 billion takeover of Placer Dome.

While the merger – now recommended by Placer's board - will create the world's biggest gold miner, analysts say Goldcorp could emerge as the true victor.

As part of the deal, Goldcorp is paying $1.7 billion cash for Placer's stakes in Campbell, Porcupine, Musselwhite gold mines in Ontario and assets in Chile and the Dominican Republic.

Although Goldcorp is parting with more cash than it originally intended, UBS says the deal will come as a huge boost to its gold production and reserves, according to CBC Business News.

Following encouraging noises from Goldcorp management, UBS expects the company to save $50 million through synergies through the move – higher than the $30 million originally anticipated.

UBS now expects Goldcorp to increase its gold production from 2.03 million ounces in 2006 to 2.8 million ounces in 2009.

The wider deal has also received backing from analysts, despite initial concerns over Barrick and Placer's combined hedge book – which would be the industry's largest at about 21 million ounces.

Goldcorp is currently Canada's fourth biggest gold producer.

 

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