Barrick Gold to unveil merger with Randgold Resources, say sources

The new company will own gold mines and deposits such as Randgold’s Kibali mine in the Democratic Republic of Congo and Barrick’s Cortez mine in Nevada

The new company will own gold mines and deposits such as Randgold’s Kibali mine in the Democratic Republic of Congo and Barrick’s Cortez mine in Nevada

Barrick and Shandong Gold have also created internal working groups that are sharing technical expertise and best practices focused on best-in-class mining practices and innovation.

New Barrick is valued at 5.1 times 2017 Ebitda, against an average of 8.8 times for the other four miners.

"It does call into question the credibility of the management team, to say one thing and do the opposite", he said. "You might expect the reaction will be that Randgold shareholders will not like it, but Randgold (stock) is up today".

"Now I have to think of Barrick as a much more risky play", he said. In a note to clients on Monday, he wrote that it increased the risk profile for Barrick "given the direct exposure to further African operating and geopolitical risks". This lack of a premium for Randgold shareholders prompted scepticism from some analysts who were also concerned that Randgold's agility could be bogged down by the mammoth Barrick.

Meanwhile, in Mali, where its Loulo-Gounkoto complex produces roughly 700,000 ounces of gold, it is embroiled in an arbitration with the government over a US$60 million tax dispute. Bristow has long criticised the volume over value approach of gold mining companies whilst Thornton - a former banker with Goldman Sachs Group - has espoused a strategy that seeks to recapture the entrepreneurial spirit of Barrick founder, Peter Munk, whlle adopting modern day investment morés in respect of the company retaining its truly world class gold deposits whilst freeing itself of the balance.

For the most part, Randgold has operated without major incident in African jurisdictions but this year has been trickier than most in its recent history.

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The price of gold has fallen more than 8% this year, putting all gold producers under pressure.

BARRICK Gold Corporation is to unveil a proposal aimed at merging some of its gold mining operations with those of UK-listed Randgold Resources, according to Bloomberg News which cited people "familiar with the discussions". John Thornton, Barrick's executive chairman, for years has been preaching that bigger is not better in the gold industry, and that the only thing that matters is profitable mining.

Randgold's management team led by Bristow, the company's CEO for the past 23 years, has won high marks for operating successfully in Africa, which can be politically hard for mining companies including Barrick, which has a dispute with Tanzania about a mine it operates in the East African country.

Exchange ratio has been agreed based on the volume-weighted average prices of Barrick shares traded on NYSE, and Randgold ADSs traded on Nasdaq over the 20 trading days ended on September 21.

The combined entity will have a market value of more than $18 billion.Barrick shareholders will end up owning about 67% of the new company.

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