Canada-based mining company Barrick Gold and its Senegalese joint venture partner have signed an agreement to offload a 90% stake in the Massawa project to Teranga Gold in Senegal for up to $430m.
Massawa is one of the highest-grade undeveloped open pit reserves in Africa, with a historical mineral reserves base of 2.6 million ounces of gold from 20.9 million tonnes at 3.94 g/t gold. It is located within trucking distance of Teranga’s flagship Sabodala gold mine in Senegal.
It was discovered by RandgoldResources, which merged with Barrick effective 1 January 2019.
The acquisition includes an upfront payment of $380m, comprising $300m in cash and 20.72 million in Teranga common shares. It also involves a contingent payment of up to $50m based on the average gold price for the three-year period immediately following the closing of the deal.
Following the transaction, Barrick will hold more than 19.1 million Teranga common shares, representing 11.45% of the company’s issued and outstanding shares, and it will have the authority to nominate one Teranga director for as long as it retains a minimum of 10% equity interest in the company.
Barrick president and CEO Mark Bristow said: “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.
“In the case of Massawa, Teranga has the appropriate infrastructure and processing facilities approximately 25 kilometres away, and combining the orebodies and the geological prospectivity will add further benefits. This is a good example of an instance where assets we own might be better suited in combination with others.”
Transaction is scheduled to be concluded in first quarter of 2020
The deal is expected to be completed in the first quarter of next year.
The transaction is subject to receipt of the Massawa exploitation license and residual exploration license from the Senegal government, certain other acknowledgments from the Government of Senegal and other customary closing conditions.
For the deal, Scotia Capital is serving as financial advisor to Barrick while Davies Ward Phillips & Vineberg and Norton Rose Fulbright are acting as legal counsel to Barrick.
