Randgold’s Loulo-Gounkoto complex in Mali. (Image: Randgold Resources)
TORONTO – Barrick Gold has made an all-share offer worth US$6 billion for Randgold Resources. The merger, subject to the approval of both companies’ shareholders, will create an industry leading gold miner with a combined market cap of US$18 billion.
Barrick intends to acquire all of the issued and outstanding shares of Randgold for an estimated US$6 billion in Barrick shares. Each Randgold shareholder will receive 6.128 “New” Barrick shares for each Randgold share. When the deal closes, current Barrick shareholders will own about 66.6% and Randgold shareholders will own 33.4% of New Barrick on a fully diluted basis.
The deal is expected to close in Q1 2019, and a new executive team has already been proposed. John Thornton, now Barrick chairman, will become executive chairman of New Barrick. Mark Bristow, currently CEO of Randgold, will become president and CEO of New Barrick. Graham Shuttleworth of Randgold will become senior executive VP and CFO, and Kevin Thomson of Barrick will become senior executive VP of strategic matters. Two-thirds of the New Barrick board will be nominated by Barrick, and one-third by Randgold.
The proposed merger has left some analysts with lingering questions. What will happened to Acacia? Barrick created Acacia to segment its African assets. Randgold is primarily invested in that continent – Mali, Senegal, Cote Ivoire, and DRC. Will Barrick buy back Acacia? Will Barrick be content to hold a new portfolio of African ventures? Or could Barrick spin out Randgold’s assets to Acacia?
Already DaMina Advisors has expressed doubts that the Barrick board will approve the acquisition. Should the Barrick board dig in its heels, chairman John Thornton could be ousted.
A list of Randgold’s producers includes Massawa, Tongon, Kibali, Morila, and Loulo-Gounkoto. For its part, Barrick brings the Cortez, Golden Sunlight, Goldstrike, Hemlo, Jabal Sayid, Kalgoorlie, Lagunas Norte, Lumwana, Porgera, Pueblo Viejo, South Arturo, Turquoise Ridge, and Veladero mines to the table. (Note that at several mines the companies do not have 100% ownership.) In 2018 Barrick produced 5.3 million oz. of gold and Randgold 1.3 million oz.
Details of the merger are available and at www.RangoldResources.com and www.Barrick.com.
Elsewhere, Barrick and its 50% partner at the Veladero mine in Argentina, China’s Shandong Gold, are making a mutual investment in each other. Shandong will purchase up to US$300 million of Barrick shares, and Barrick will invest an equivalent amount in shares of Shandong.