Barrick Mining Corp. ABX-T chief executive Mark Hill says the company may reach an early agreement with Newmont Corp. NEM-N to bring its promising Fourmile discovery into their joint venture Nevada Gold Mines (NGM).
Toronto-based Barrick and Denver-based Newmont are 61.5 per cent and 38.5 per cent holders respectively in NGM, a joint venture that contains most of Barrick’s North American assets.
Barrick’s wholly-owned Fourmile discovery, which the Canadian mining company calls, “one of the century’s greatest gold discoveries,” is not part of NGM, and wasn’t expected to be “vended in” for a few more years. A pre-feasibility study is expected to be complete in 2028, which would give Newmont a better understanding of the value of the project, located in Nevada.
A Barrick assessment said Fourmile could produce up to 750,000 ounces of gold a year for at least 25 years, which would make it one of the biggest gold mines in the world.Chris Helgren/Reuters
On a Monday conference call with analysts following the release of Barrick’s first-quarter earnings, Mr. Hill said there’s a possibility an early agreement could be reached with Newmont on Fourmile. He did not specify a timeline.
“If we can reach an agreement, I mean we would bring it in for sure,” he said. “It will be an open discussion, and we’ll just see if we can bring it in early.”
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A preliminary economic assessment completed by Barrick last year said Fourmile could produce up to 750,000 ounces of gold a year for at least 25 years, which would make it one of the biggest gold mines in the world.
While Fourmile isn’t part of NGM, it is an integral part of Barrick’s planned partial spin-off of its North American operations, which is slated to happen before the end of this year. The company plans to spin-off a stake of between 10 and 15 per cent in its North American operations, which also includes its stake in NGM, and its 60-per-cent stake in the Pueblo Viejo mine in the Dominican Republic.
Earlier this year, Barrick said the spin-off, to be called “North American Barrick,” will have its primary stock listing in New York with a secondary listing in Toronto. It is unclear where the spinout will be domiciled.
Former chief executive Mark Bristow told The Globe and Mail last year that Barrick was considering redomiciling to the United States.
Mr. Bristow parted ways with Barrick last September.
In an address to shareholders on Friday, Barrick chairman John Thornton appeared to make it clear that Barrick, which will retain a majority stake in North American Barrick, has no intention of moving to the U.S. He said Barrick “will always be an iconic Canadian company,” with a dual listing.
Mr. Thornton declined an interview request.
Barrick is spinning off its North American operations in an attempt to boost its long-term stock market valuation. Barrick has long traded at a discount to peers such as Toronto-based Agnico Eagle Mines Ltd. owing to its heavy exposure to risky jurisdictions such as Africa, the Middle East and Pakistan. By creating a pure play with only exposure to its lower-risk North American operations, it is hoping that will result in a “re-rate” of its stock.
Barrick remains significantly undervalued, Jefferies analyst Fahad Tariq said in a note to clients on Monday. While its strong quarterly performance is helping, “a material re-rating” likely requires both the execution of the North American IPO and “divesting assets in challenging jurisdictions,” he said.
When asked in the conference call about possible asset sales, Mr. Hill expressed some reservations about Africa, saying it was obvious which countries are not ideal for investment.
Volatility has risen recently in Mali, where Barrick operates the Loulo-Gounkoto gold complex. Late last month, Russian troops abandoned a key military base in Mali after insurgents launched an unprecedented wave of co-ordinated attacks across the country.
“We’re trying to focus our growth in more stable areas, where we have more certainty around the mining regime and the ability to operate without a lot of interference,” Mr. Hill said.
Barrick beat analyst expectations in the first quarter, with higher profits and lower costs than anticipated.
With a report by Geoffrey York.