Barrick says Newmont deal clears path for North American IPO
Barrick Mining reported a rise in second-quarter profit, buoyed by higher bullion prices, and struck a $1.95-billion deal with Newmont Corporation to settle disputes over Nevada Gold Mines.
Newmont consented to Barrick's planned initial public offering (IPO) of its North American gold assets, the companies said, clearing the path for an IPO that Barrick expects to complete by the end of this year.
Barrick is looking for a new CEO to lead its businesses outside of North America. CEO Mark Hill, who is set to head the company's North American entity, said he would prefer an internal candidate.
The Canadian gold miner met analysts' profit estimate of 82 cents, according to data compiled by LSEG.
It earned $1.22-billion, or 73 cents per share, for the three months ended June 30, compared with $811-million, or 47 cents per share, a year earlier.
Barrick shares were trading down 8% on the Toronto Stock Exchange at 1:00 p.m. ET (18:00 GMT).
Higher fuel costs are adding to pressure on gold miners as the U.S.-Israeli conflict with Iran disrupts oil flows and keeps energy prices elevated.
Barrick said fuel expenses, lower grades and higher royalties contributed to an 11% rise in gold all-in sustaining costs.
Its second-quarter realized gold price rose 34% from a year earlier to $4 417/oz, while gold output was flat at 796000 oz.
Barrick said lower grades processed at its Carlin and Cortez gold mines in Nevada and North Mara mine in Tanzania, along with higher fuel costs and royalties associated with the stronger realized gold price, drove the increase in gold costs.
Its gold cost of sales rose 20% in the second quarter to $1993/oz, while gold's all-in sustaining cost, a key industry measure of the total cost of producing gold, including sustaining capital spending, rose 11% to $1866/oz.
NEWMONT DEAL CLEARS IPO PATH
Barrick owns 61.5% and Newmont 38.5% in the Nevada Gold Mines joint venture. Earlier this year, Reuters reported that Barrick will need Newmont's approval to move ahead with its proposed North American spin-off, because Newmont has the first right of refusal if Barrick tries to sell its stake.
Newmont also had disputes with Barrick regarding the operational issues at Nevada Gold Mines.
Under the agreement announced on Monday, Barrick will transfer its Fourmile project to the Nevada Gold Mines joint venture, while Newmont will transfer its Mike and Fiberline projects and pay Barrick $1.95-billion in cash within 30 days.
The agreement will create a nearly 100-million-ounce gold complex in Nevada, Barrick said.
Barrick's planned North American IPO will include its interests in and operatorship of Nevada Gold Mines and Pueblo Viejo, the Fourmile project and other North American exploration properties, along with the assets contributed by Newmont.
