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Barrick Gold Corp. has formally asked Newmont Mining Corp. to resume merger talks after their negotiations hit an impasse late last week, according to a person familiar with the situation.
The North American-based gold miners had come close to agreeing on an all-stock deal, but their discussions broke down over which assets to spin out from the combined company, other sources have said.
The companies had aimed to make an announcement before their annual shareholder meetings this month. Colorado-based Newmont held its meeting in Delaware Wednesday morning, and Toronto-headquartered Barrick’s meeting is scheduled for April 30.
Barrick e-mailed the request to restart talks to Newmont, outlining the terms of their friendly proposal as well as issues that still must be resolved, according to the source familiar with what transpired.
Barrick’s overture shows the company continues to pursue Newmont and now it is up to the American miner to respond. Although the companies see the value in merging, it is unclear whether they will revive formal discussions. Spokesmen for Barrick and Newmont declined comment.
Uniting the world’s two largest gold producers would create a North American-based gold giant, with production topping 11 million ounces a year. It would also allow the miners to cut costs by combining their assets in the Americas and Australia – a critical selling point for shareholders.
The companies had found about $1-billion in savings, according to the terms of their most recent discussions, sources said. Analysts have disputed the amount as too high. But Barrick’s founder and outgoing chairman Peter Munk said there were “significant synergies and cost savings” to be realized.
With a week left until he retires from Barrick, the 86-year-old Mr. Munk embarked on a media roadshow of sorts to discuss Barrick and the gold industry, and he also touted the cost-saving potential of a tie-up with Newmont.
If the gold companies resume talks and cut a deal, their fate will be left up to their shareholders. So far, they appear receptive.
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