Barrick Gold Corp. and Newmont Mining Corp. have agreed to team up in a joint venture in Nevada that will see Barrick drop its hostile bid for its biggest rival and unite the world’s two biggest gold miners in one of the richest goldfields on the planet.
The accord means Colorado-based Newmont is far more likely to succeed in its efforts to buy Goldcorp Inc. and bypass Barrick as the world’s biggest gold company. Barrick’s pursuit of Newmont had threatened to derail the US$10-billion deal that was announced in January.
The Barrick-Newmont ownership split announced on Monday will be 61.5 per cent in favour of Barrick with the Toronto-based miner also named as the operator. The agreement will see gigantic mines, including Barrick’s Goldstrike and Cortez operations, along with Newmont’s Carlin, unite under one roof.
Both companies say the combination will generate an average of US$500-million in cost savings over the first five years through the common sharing of processing facilities, eliminating duplicate costs and co-ordinating on mine plans.
“It is what we were looking for and it shows great leadership between these two companies,” said Joe Foster, portfolio manager of the VanEck International Investors Gold Fund, Barrick’s biggest shareholder and Newmont’s third largest.