[Barrick and Randgold] Merger says ‘two very positive things about the sector’: Garofalo – by Richard Roberts (Mining Journal – September 26, 2018)


“Strange”, said one veteran company boss, because the sound “cultural fit” trumpeted by the proponents did not quite seem to gel with past comments by Randgold CEO Mark Bristow in particular, and because Barrick once seemed to be shifting its future focus away from Africa.

A “positive” for the sector because, as several industry leaders and observers noted over the past week, at both the Denver Gold Forum and the preceding Beaver Creek Precious Metals Summit, gold equities other than the likes of sector numero uno Newmont Mining had all but disappeared from major market indices due to declining worth and hence relevance.

The Barrick-Randgold merger to create an $18 billion company, officially announced at the start of this week, initially generated some of the positive investor focus on the sector many hope will come from such large-scale transactions going forward. The share prices of Newmont, Goldcorp, Agnico Eagle and Barrick itself reacted positively to the news – albeit nearly all the big North American-listed gold equities have seen their prices deteriorate (some handsomely) since July.

They’ve tended to flatten since the start of the week. But both conferences have heard plenty about North American market disaffection with gold equities and the need for a spark – other than gold prices – to drive new investor interest.

The spark may not be consolidation leading to greater scale. But it will certainly be the creation of companies with enough genuine tier-one assets in the right locations, promising and delivering the sort of returns some companies are now starting to produce consistently.

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