2015 : YEAR OF THE MEGA MERGERS
go about it ,” he said . Graf believes the companies are better suited to form a joint venture , or Barrick could sell its Goldstrike complex to Newmont .
However , JP Morgan ’ s John Bridges and his team believe the mega merger deal still makes sense .
“ We continue to see the best outcome for Barrick and Newmont to be a consolidation of the companies Nevada operations . We still feel a combination creates value by accessing Nevada savings which we estimate are around $ 250m pa . This should make debt more manageable . An important question for Newmont is what deal can be concluded with the Indonesians over its insistence that miners build smelters to upgrade concentrates to metal within Indonesia . If Newmont ’ s cashflow expectations from its Indonesian mine Batu Hijau suffer a haircut , it could be more interested in the savings available from a deal with Barrick .
A combination would allow the asset portfolio to be optimized or possibly spun out in one or more spincos . However , we fear spinning out less popular assets might not realize the hoped for value .”
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