Exclusive: Sources claim Barrick Mining is thinking about dividing into two companies
The board of Canada’s Barrick Mining (ABX.TO) has raised the possibility of splitting the company into two separate entities, one focused on North America and the other on Africa and Asia, according to four sources familiar with the company’s thinking who spoke to Reuters.
According to the sources, a split could also involve the outright sale of Barrick’s African assets, along with the Reko Diq mine in Pakistan, once financing has been secured.
In Mali, Barrick is seeking to settle a disagreement with the military administration of the African nation prior to divesting the asset, sources indicated.
A spokesperson for Barrick has not yet replied to requests for comment. Interim CEO Mark Hill, when questioned on Monday regarding a potential split, stated that the company refrains from commenting on speculation.
Discussions are currently in progress, and no agreements have been reached as of now, according to the sources.
The proposed plans, if implemented, would effectively undo Barrick’s merger with Randgold from 2019 and divest assets acquired under former CEO Mark Bristow.
According to one of the sources, the company’s emphasis on North America, particularly Fourmile, a significant undeveloped gold mine in Nevada, would safeguard Barrick from being undervalued in the event of a potential takeover offer.
The test production at Fourmile mine is scheduled to commence in 2029. Earlier this week, Hill announced that the company would redirect its focus to North America, leading to a ratings upgrade on its shares by analysts at Jefferies and other firms.
On Friday, shares of Barrick experienced an increase on the Toronto Stock Exchange, closing with a 3% rise following the Reuters report.
Investors believe that Barrick’s shares are undervalued and have urged the company to explore opportunities to capitalize on the unprecedented surge in gold prices.
While Barrick shares have surged by 130% this year, the company’s returns over the past five years have lagged behind its competitors, achieving a gain of 52% compared to Agnico Eagle’s impressive 142% increase.
According to one individual, investors had earlier suggested that the company split into two divisions: one focused on stable assets like Nevada and Fourmile, and the other on riskier assets located in Africa, Papua New Guinea, and Reko Diq.
Investors indicate that Barrick, as one of the rare gold mining companies with assets across various continents, faces significant risks associated with its operations in politically unstable regions.
Earlier this year, Barrick lost control of its most profitable mine, the Loulo-Gounkoto complex in Mali, resulting in a $1 billion write-off. A conflict regarding the nation’s revised mining tax code resulted in the confiscation of 3 metric tons of gold and the appointment of a provisional administrator to oversee the mine. Four employees of Barrick remain in custody under the Malian administration.
“One Barrick investor remarked that there is considerable value in Nevada.” An investor noted that if the Nevada mine operated as a standalone publicly listed company, it would rank among the largest gold mining companies in the world by market capitalization. The investor requested anonymity due to lack of authorization to speak with the media.
The company has previously refrained from splitting, as this investor noted that without Nevada, the other mines hold little value. Barrick operates the Nevada gold mine in collaboration with Newmont Corp (NEM.N).
Alongside its operations in Nevada and Mali, the company also manages copper mines in the Democratic Republic of Congo, as well as gold mines in Tanzania, the Dominican Republic, and Papua New Guinea.
