Barrick Mining CEO Mark Bristow in Cape Town, South Africa, in February. Barrick is selling Hemlo, its only Canadian mine, to Carcetti Capital.Esa Alexander/Reuters
Barrick Mining Corp. ABX-T is selling Hemlo, its only Canadian mine, to Carcetti Capital Corp. CART-H-X for up to US$1.09-billion.
Toronto-based Barrick put Hemlo, in Northern Ontario, up for sale earlier in the year, deeming it a “non-core” asset. Hemlo is among the company’s smaller mines, and its costs are on the higher end of Barrick‘s operations.
Vancouver-based Carcetti will pay Barrick both US$875-million and US$50-million in its shares upfront. Additionally, Barrick stands to receive up to US$165-million contingent on production from the mine and the price of gold over a five-year period.
Barrick takes $1-billion writedown on Mali operations as government dispute drags on
Barrick said in a release that the proceeds further strengthen its balance sheet and support its commitment to return capital to shareholders.
The gold miner has generated a lot of new cash from asset sales this year. In April, the company announced the sale of its 50-per-cent stake in the Donlin gold project in Alaska for US$1-billion.
Fahad Tariq, an analyst with Jefferies, said in a note to clients that Barrick is selling at an attractive valuation and that stock buybacks from the Hemlo proceeds are likely.
“Given Barrick shares trade at a steep discount to peers, buybacks make sense,” he said.
Barrick CEO Bristow signals some regret on missing out on Kirkland Lake acquisition
With Barrick shedding its only operating mine in Canada, it is further cutting its footprint in its home market. After Barrick bought Randgold Resources Ltd. in 2019, it cut scores of jobs at its Toronto head office. Barrick chief executive officer Mark Bristow told The Globe and Mail in February that the company was considering redomiciling to the United States.
In its Wednesday evening statement, Barrick said that Canada is still an important jurisdiction for the company, pointing to its work on several early stage exploration projects. Barrick added that it will continue to pursue opportunities to find and operate world-class gold and copper mines in Canada.
Barrick announced the Hemlo sale days after Canada’s Teck Resources Ltd. TECK-B-T agreed to a takeover by Britain’s Anglo American PLC NGLOY for roughly US$20-billion. Some market watchers have speculated that Barrick could launch a rival proposal for Vancouver-based Teck. London-based Anglo is not paying a premium for the big Canadian copper miner, leaving an opportunity for other bids to surface.
Upcoming Q&A: Send us your questions about the Anglo Teck deal
Barrick has made no secret of its desire to grow its copper business. The company recently changed its name from Barrick Gold to reflect its increased focus on the critical metal. It already operates copper mines in Zambia and Saudi Arabia, and has started construction on a gigantic copper and gold operation in Pakistan.
The world’s biggest gold companies are streamlining their portfolios to zero in on their biggest and most profitable operations – and they are cashing out at a time of record high gold prices. Bullion traded at US$3,674 an ounce on Thursday.
Late last year, Denver-based Newmont Corp. NGT-T, the world’s biggest gold miner, sold its Musselwhite mine in Ontario to Vancouver-based Orla Mining Ltd. OLA-T for around US$850-million.
Barrick was at one time the world’s biggest gold producer, but it lost its throne to Newmont about seven year ago. It has slipped further down the rankings since then, getting passed in market value by Agnico Eagle Mines Ltd. AEM-T, a Canadian miner, last year.
Carcetti Capital plans to change its name to Hemlo Mining Corp. after the transaction with Barrick closes. Its management and board includes former Teck geologist Robert Quartermain. Later in his career he founded gold miner Pretium Resources Inc., which was acquired by Australia’s Newcrest Mining Ltd. He was also previously the CEO of SSR Mining Inc.
What do you want to know about the Anglo Teck deal?
On Friday, Sept. 12 at 12 p.m. ET, mining reporter Niall McGee and business columnists Andrew Willis and Eric Reguly will answer your questions about one of the biggest mining deals. What were the circumstances that led to Anglo buying Teck?
How likely is it that the government will let it happen? What does this mean for Canada’s critical mineral strategy? Submit your question now.