Gold miners Randgold and Barrick agree $18bn all-share merger

Lloyd Doyle
September 24, 2018

Canada's Barrick Gold is buying Randgold Resources, creating the world's biggest gold miner with a value of about $18bn (£14bn).

The new company will keep the Barrick name and be listed in NY and Toronto, while Randgold's London listing will be cancelled.

Writing on John Thornton, chairman of Barrick Gold, on September, 14, the Globe & Mail observed that: "Mr. Thornton greatly admires Randgold and wants to emulate its superior returns". The company shed non-core assets outright, or sold stakes to partners, to fix its balance sheet, after its debt peaked at $15.8 billion in 2013.

Randgold shares gained 3.8 per cent to 5,108 pence as of 8:10 London trading.

"Our opinion is that the proposed merger, instead of being based on merit, strength and strategic integration, is more akin to the proverbial "two drunks supporting each other at closing time", said Kieron Hodgson from Panmure Research. "Both aim to generate free cash flow even if gold prices drop to as low as $1,000 an ounce", said Bloomberg News. Mark Bristow, chief executive of Randgold, will become president and chief executive. They also have high internal "hurdle" rates for investment; in Barrick's case they must generate an internal rate of return of 15 per cent and in Randgold's 20 per cent. Randgold shareholders will be entitled to receive a Randgold dividend for the 2018 financial year of $2.00 per Randgold share. Newmont didn't immediately respond to an emailed request for comment outside usual office hours.

Speculation of a tie-up between the two companies comes as this year's Denver Gold Group conference, is about to kick into gear.

Other reports by Iphone Fresh

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