Two of the worlds leading gold mining companies have entered into a multi billion dollar merger deal, creating one company with the greatest concentration of Tier One Gold Assets in the whole world.
Barrick Gold and Randgold have announced in a statement this week that a share-for-share merger of the two companies has been agreed upon, in a deal valued at around $18.3 billion.
Following completion of the Merger, Barrick Shareholders will own approximately 66.6 per cent and Randgold Shareholders will own approximately 33.4 per cent of the New Barrick Group on a fully-diluted basis.
“The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry, bringing together the world’s largest collection of Tier One Gold Assets, with a proven management team that has consistently delivered among the best shareholder returns in the gold sector over the past decade,” said John L Thornton, Executive Chairman of Barrick. “Our overriding measure of success will be the returns we generate and not the number of ounces we produce, balancing boldness and prudence to deliver consistent and growing returns to our fellow owners, a truly simple but radical and achievable concept.”
The New Barrick Group will have a portfolio containing five of the world’s top ten Tier One Gold Assets by total cash cost. These include Cortez, Goldstrike, Kibali (45%), Loulo-Gounkoto (80%) and Pueblo Viejo (60%) respectively. There will also be two other operations that can be developed into Tier One projects; the Goldrush/Fourmile and Turquoise Ride (75%) projects.
“Our industry has been criticised for its short-term focus, undisciplined growth and poor returns on invested capital. The merged company will be very different,” said Mark Bristow, CEO of Randgold. “Its goal will be to deliver sector leading returns, and in order to achieve this, we will need to take a very critical view of our asset base and how we run our business, and be prepared to make tough decisions. By employing a strategy similar to the one that proved very successful at Randgold, but on a larger scale, the New Barrick Group will leverage some of the world's best mines and talent to create real value for all stakeholders.”