Barrick has eye on deals, debt reduction
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Barrick has eye on deals, debt reduction

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Barrick Gold Corp. remains on the path of selling projects that don’t fit with its goals and that help reduce debt while looking ahead to more consolidation of mining companies, such as the possibility of a merger with Freeport McMoRan in the long term.

“It is gratifying to continue the value-creating consolidation of assets in the gold mining sector, which started a year ago with the merger between Barrick and Randgold, followed shortly thereafter by the merger of the Nevada assets of Barrick and Newmont Goldcorp,” said Barrick President and Chief Executive Mark Bristow.

Barrick and Newmont formed Nevada Gold Mines to operate their combined assets in Nevada.

He made the statement in an announcement on Dec. 10 that Barrick and a Senagalese joint venture partner agreed to sell their combined 90 percent interest in the Massawa project in Senegal to Teranga Gold Corp. for up to $430 million.

Bristow also told Bloomberg on Dec. 12 the company should have zero debt by the end of next year, and he said that while it makes sense to talk about a merger with Freeport, any such deal would have to be friendly. He said there are no plans to rush into anything.

He said Barrick has the “firepower” to build a mine or support a merger.

Phoenix-based Freeport operates the giant Grasberg copper and gold mine in Indonesia and copper mines in Arizona that include the Morenci, Miami and Bagdad mines, as well as mines in South America. The company years ago operated the Jerritt Canyon Mine north of Elko.

Toronto-based Barrick is more centered on gold production, but Bristow told Bloomberg that “if we want to be a materially relevant organization focused on gold, we’re going to have to get our head around copper.” He had said in November that there is logic in a Barrick-Freeport merger.

The agreement to sell the mine in Senegal follows Barrick’s agreement last month to sell its half of the Kalgoorlie Super Pit in Australia to Saracen Mineral Holdings Ltd. for $750 million. Newmont owns the other half of the mine.

The deal for Massawa includes an up-front payment of $380 million that involves roughly $80 million in Teranga shares and $300 million in cash, plus contingent payments of up to $50 million based on gold prices. Barrick stated that it would receive 92.5 percent of the purchase proceeds, and the remainder would go to its local Senegalese partner.

Rangold Resources discovered Massawa 10 years ago.

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