Bristow’s masterstroke gives Barrick control of Newmont’s Nevada assets — but now he must deliver – by Gabriel Friedman (Financial Post – March 16, 2019)

https://business.financialpost.com/

Barrick CEO Mark Bristow says investor’s poor reaction to the Newmont-Goldcorp merger created an opportunity and he pounced

One day after announcing a deal to effectively create the world’s third largest gold company, Mark Bristow, chief executive of Barrick Gold Corp., stayed in Elko, Nevada — a dry, rugged city situated near the Carlin Trend, one of the world’s richest gold mining districts — to assemble the team responsible for executing his promises.

For decades, Toronto-based Barrick Gold Corp. and its archrival Colorado-based Newmont Mining Corp., the two biggest gold mining companies in the world, have fuelled a large part of their growth through discoveries along the Carlin Trend, and tried numerous times to reach an accord to work together there.

Now, Bristow, 12 weeks into his tenure at the helm of Barrick, is holding up a joint venture agreement with Newmont to share assets in Nevada, which he claims will save both companies US$500 million per year, and billions of dollars over the long run. What’s more the deal was ramrodded through in a matter of days while Bristow proposed a $17.8 billion hostile offer to takeover all of Newmont.

In the end, Bristow agreed to drop his hostile bid in exchange for a 61.5 per cent cut of the revenues from the joint venture and control of the Nevada mines and infrastructure. The joint venture will produce 4.1 million ounces of gold this year, making the Nevada complex the third largest gold producer in the world.

Both Bristow and Newmont chief executive Gary Goldberg are celebrating the deal, but some analysts and investors question whether the cost savings will accrue equally to both sides, and whether the size of the estimate is accurate.

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