Is the Barrick-Newmont joint venture a ‘stepping stone’ to a bigger deal? – by Gabriel Friedman (Financial Post – March 12, 2019)

When asked if the venture was a prelude to something else, Barrick CEO Mark Bristow chuckled: ‘I’m not prepared to comment on that’

Barrick Gold Corp. and Newmont Mining Corp., the two largest gold producers in the world, ended their feud Monday and agreed to work together in the Nevada desert where both companies operate vast mining complexes.

Almost immediately, questions surfaced about whether it was a prelude to a larger deal between the two giants and Barrick chief executive Mark Bristow declined to rule out such an idea. Asked by one analyst whether the Nevada joint venture is merely “a stepping stone” to greater consolidation, Bristow chuckled.

“I’m not prepared to comment on that,” he said.As part of that agreement announced Monday, however, Toronto-headquartered Barrick agreed to drop its US$17.8 billion hostile bid for Colorado-headquartered Newmont and to commit to a two-year standstill that prevents further action.

Such a combination would have changed the competitive dynamics of the gold mining industry by creating a single dominant player, multiple times larger than its nearest competitor.

Even though Barrick was offering an eight per cent discount on Newmont’s price, its offer stirred many analysts’ appetite for greater consolidation in the space on the belief that generalist investors have fled the sector after years of poor returns as most companies lack adequate liquidity and diversification.

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