Barrick-Newmont merger would leave up to $7B of assets up for grabs

Canada’s Barrick Gold’s (TSX:ABX)(NYSE:GOLD) hostile $17.8 billion bid for rival Newmont Mining (NYSE:NEM) could free up a group of assets the combined company would no longer consider key, such as their Kalgoorlie super pit 50/50 joint-venture in Western Australia.

After launching the offer on Tuesday, Barrick chief executive officer Mark Bristow said he had already been contacted by parties that have expressed interest in the company’s Australian assets.

The divestment goals announced by the Newmont-Goldcorp tie-up and the new Barrick-Randgold merger provide “a significant opportunity” for ASX-listed names to acquire assets, according to UBS analysts.

“Australian gold producers have stronger balance sheets than their North American peers. We think Evolution and Northern Star are best placed to make accretive acquisitions given their strong track records in this area,” said UBS in a note last month.

The divestment goals of the planned Newmont-Goldcorp tie-up and the new Barrick-Randgold merger provide “a significant opportunity” for ASX-listed names to acquire assets — analysts.

Market rumours indicate that one of the potential buyers could be Melbourne-based Newcrest Mining (ASX:NCM), especially after Bristow said there was “a very good chance” of some Australian operators becoming involved.

Another name being passed around is Evolution Mining (ASX:EVN), Australia’s second-biggest gold producer.

“We’d certainly be interested if [Barrick] decided to dispose of those assets,” Evolution’s Executive Chairman Jake Klein said Monday in an interview with Bloomberg Television. “These things are potentially high-quality assets.”

In the past three years, Evolution has been acquiring projects and mines across Australia, including Barrick’s Cowal operation.

The company, however, is likely to face competing offers from fellow miners, including Newcrest and Northern Star Resources, as well as from foreign gold producers with interests in Australia, such as AngloGold Ashanti.

Other than the Super Pit, which Barrick tried to offload in 2017, the regional assets up for grabs would include the Porgera mine in PNG, the Tanami underground mine in the Northern Territory, and the Boddington open pit in Western Australia.

According to analysts, the portfolio could fetch between $5.6 billion and $7 billion, which is exactly what Bristow said the “synergy” benefits of a merger with Newmont would generate.

The potential mega-merger would create a $42 billion-global gold mining mammoth, leaving Newcrest as the world’s No.2 producer of the precious metal, with a current value of about $14 billion.

Should Newmont choose to go ahead with its planned $10 billion acquisition of Goldcorp (TSX:G) (NYSE:GG) instead, the Colorado-based firm would become the world’s biggest, with Barrick grabbing the second place and Newcrest the third.

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