Barrick Gold buys Randgold to create world’s biggest gold miner

Barrick to buy Randgold for $18.3B forming giant global gold miner

The combined group, which will be listed in Toronto and NY, will have a diverse portfolio of assets containing some of the world's most profitable gold mines, including Cortez and Goldstrike in Nevada and the Kibali mine in the Democratic Republic of Congo. Mining companies have found themselves caught up in a wave of resource nationalism around the world, but the tide has been particularly strong in many parts of Africa, where politicians are threatening to upend long-standing agreements in order to reap greater economic rewards from local resources. Wells Fargo & Company MN now owns 540,220 shares of the basic materials company's stock worth $44,968,000 after acquiring an additional 3,597 shares during the period.

Under Executive Chairman John Thornton, Barrick has been selling assets and stakes in mines to reduce costs and debt. New Barrick is valued at 5.1 times 2017 Ebitda, against an average of 8.8 times for the other four miners.

The company's production is scheduled to decline this year from 5.3 million ounces of gold in 2017 to around 4.5 million ounces this year, which means it was set to relinquish its role as the world's largest gold producer to USA -based rival Newmont Mining Corp.

Investors will get 6.128 new Barrick shares for each Randgold share they hold. As the earnings per share (EPS) formula is stated as earnings available to common shareholders divided by number of common stock shares outstanding, therefore its diluted EPS is calculated to be 2.48 (ttm). Both sets of investors are expected to vote on the deal around November 5.

Thornton last month outlined Barrick's plan to add more top-quality mines and to gradually shed anything of a lower caliber or that's not deemed to be "strategic".

It is noted that the total capitalization after the merger will amount to about $18.3 billion. the company will have the maximum concentration of gold assets (tier 1 gold assets) in the industry.

Barrick Gold Corporation (ABX) belonging to the Basic Materials sector has declined -1.41% and closed its last trading session at $10.47. Randgold Chief Financial Officer Graham Shuttleworth will become CFO of the new company.




Both Barrick and Randgold have lost a third of their market capitalisations over the past year before Monday's gains.

Investec analyst Hunter Hillcoat told Bloomberg that Barrick will benefit from Bristow's limitless energy and fresh perspective.

Thornton will remain as executive chairman, directing strategy and Bristow will be president and chief executive of the merged company, running day-to-day operations. "All things considered, this transformational deal should be good for Barrick shareholders over the medium/long-term".

Randgold has operations in Mali, Senegal, the Democratic Republic of Congo and Ivory Coast.

The new Barrick company, which will be listed in NY and Toronto, will own five of the world's 10 lowest cost gold mines and will be valued at US$24 billion, including debt. "You know there has been many attempts to unlock value and as you know me, I'm agnostic about who owns it". Both firms are highly focused on production costs, aiming to build portfolios that generate free cash flow even if gold prices drop to as low as US$1,000 an ounce. 48,743,300 shares of the company's stock traded hands, compared to its average volume of 11,917,469.

Barrick was advised by Morgan Stanley and M. Klein and Company, while Randgold was advised by CIBC World Markets and Barclays.

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