Goldcorp Inc., the world’s largest gold producer by market value, sold its 26 percent stake in Tahoe Resources Inc. for C$998.5 million ($811 million) to increase its near-term liquidity.
Goldcorp offered 58.1 million common shares of Tahoe for C$17.20 each in a secondary share sale, Vancouver-based Goldcorp said Monday in a statement. Reno, Nevada-based Tahoe, which closed Monday in Toronto at C$18.49, won’t receive any of the proceeds from the offering, Goldcorp said.
Like many of its peers, Goldcorp is working to lower costs and focus on the most profitable operations following two consecutive annual declines in the price of gold. The company, which operates in the Americas, is also ramping up production at new mines in Argentina and Canada.
Goldcorp will probably focus on supporting its immediate capital commitments and improve its financial flexibility, said Phil Russo, a Toronto-based analyst at Raymond James Financial Inc.
“We view the developments in its liquidity profile to be for internal purposes, rather than specific M&A posturing,” Russo said in a note.
Tahoe, which operates the Escobal silver mine in Guatemala and La Arena gold mine in Peru, dropped 9.2 percent to C$16.78 at the close in Toronto, below the offer price. Goldcorp fell 1.8 percent to C$20.18.
“Divesting non-core assets has been instrumental to Goldcorp’s growth and consistently sound financial position, and the sale of the Tahoe position supports that strategy,” Goldcorp Chief Executive Officer Chuck Jeannes said in the statement.
GMP Capital Inc. and Bank of Montreal are leading a group of banks on the share sale, according to the statement.