https://www.miningweekly.com
Financial|Gold|Mining|Resources|Infrastructure
Financial|Gold|Mining|Resources|Infrastructure
financial|gold|mining|resources|infrastructure

Merger with Newmont will unlock $7bn-plus – Barrick

Barrick president and CEO Dr Mark Bristow

Barrick president and CEO Dr Mark Bristow

Photo by Creamer Media

28th February 2019

By: Martin Creamer

Creamer Media Editor

     

Font size: - +

JOHANNESBURG (miningweekly.com) – Shareholders will lose more than $750-million a year for every year that the merger with Newmont is delayed, Barrick said on Thursday.

Barrick calculates that there is potential to unlock more than $5-billion of real synergies from the Nevada mines alone and $7-billion-plus overall. It contends that the synergies would, in turn, drive a 15% to 20% share price uplift for all shareholders prior to any rerating.

Barrick sees itself as having the majority of high-grade reserves and resources in Nevada and Newmont the majority of processing plant capacity and infrastructure, with the combination of the two providing more than 20 years of profitable production across the complex.

“Synergies are the premium,” said the company now headed by South African-born president and CEO, Dr Mark Bristow, the former founding CEO of Randgold Resources.

However, Barrick said attempts to study the opportunity and exchange information had been rebuffed.

Newmont has expressed the belief that it could itself capture Nevada synergies more efficiently through a Nevada joint venture (JV) between the companies, without exposing Newmont’s shareholders to Barrick’s riskier portfolio, integration risks and transaction costs.

But Barrick said the JV option was not the right path forward as it would not capture 100% of the Nevada synergies and calculated that the Barrick/Randgold merger had already created shareholder value of more than $5-billion.

In an interview with Mining Weekly Online earlier this month, Bristow, whose Randgold Resources recently merged into Barrick, described Nevada as being "like the Witwatersrand of the 1970s", with its brand new Goldrush-Fourmile discovery already at 12-million ounces at over 10 g/t. “I reckon that’ll go over 20-million ounces and that’s an 8-km-long deposit,” South African-born Bristow told Mining Weekly Online. And then there is Turquoise Ridge, which is the richest gold mine in the world at 15 g/t.

The Barrick/Newmont transaction, Bristow contended, was a logical and long overdue imperative for shareholders that would be far superior to Newmont’s proposed acquisition of Goldcorp, with expected Barrick/Newmont yearly synergies 7.5 times larger than the quoted annual synergies for the Newmont/Goldcorp transaction.

The Barrick/Newmont merger would, Bristow added, result in an estimated 14% upliftment in Newmont’s current net asset value (NAV) per share, offering Newmont shareholders an investment in a company of a much higher quality with a better asset base, significant liquidity, a strong balance sheet and a proven management team.

Similarly, the Barrick/Newmont merger was expected to result in a significant uplift in Barrick NAV per share from synergies, plus the opportunity for improvement in Barrick’s trading multiple from compelling financial, strategic, scale and liquidity advances.

Edited by Creamer Media Reporter

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer
Gold, hydrogen, mining boost make headlines
Gold, hydrogen, mining boost make headlines
15th March 2024
Magazine round up | 15 March 2024
Magazine round up | 15 March 2024
15th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.12 0.155s - 114pq - 2rq
Subscribe Now