Barrick’s spin-off in North America depends on approval from Newmont

Canadian mining company Barrick is currently looking to spin off its North American assets in a deal that heavily relies on the approval of their joint venture partner, Newmont. This marks a significant shift in the dynamics between the two global mining giants, as Newmont now holds substantial power over Barrick’s strategic moves, a sharp contrast from past attempts by Barrick to acquire Newmont.

Nevada Gold Mines (NGM) is the main North American asset in question, a joint venture where Barrick holds a 61.5% stake and Newmont holds the remaining 38.5%. Newmont has the first right of refusal should Barrick seek to sell its stake in NGM, highlighting the pivotal role Newmont plays in any potential transactions involving this valuable asset.

The process of the spin-off began last year when Barrick announced plans to restructure its operations by separating its North American business from riskier ventures in other parts of the world. This decision follows the departure of former CEO Mark Bristow and aims to streamline operations and focus on core assets. The proposed initial public offering (IPO) of the North American assets includes NGM, the Pueblo Viejo mine in the Dominican Republic, and the Fourmile mine in Nevada, which is still under development.

In accordance with their joint venture agreement, both Barrick and Newmont are required to offer their Nevada joint venture interest to the other party before exploring options with third parties. Any transfer of shares necessitates consent from the other party, as outlined in filings with the US Securities and Exchange Commission. Additionally, Barrick will need Newmont’s financial backing for the development of the Fourmile mine, a critical asset intended to be part of the IPO.

The restructuring efforts and potential split into two separate entities by Barrick have garnered significant interest from investors, especially amidst rising gold prices setting record highs. The company is expected to reveal more details about their plans during their Q4 earnings report in February. Barrick confirmed its commitment to the joint venture with Newmont and assured compliance with all terms, while Newmont reiterated that the Nevada Gold Mines agreement remains unchanged.

Newmont’s stance on Barrick’s proposed IPO of its North American gold assets remains neutral, indicating that no alterations have been made to the joint venture agreement as publicly disclosed. Both companies are closely monitoring the situation, waiting for further details and updates before reaching any final decisions on the matter.