The merger of Barrick Gold and Randgold Resources is aimed at creating a major gold company with high concentration of Tier One Gold Assets, which have a stated mine life of more than ten years with a production of at least five hundred thousand ounces of gold in 2017.
Under the terms of the agreement, each Randgold Shareholder will receive 6.1280 New Barrick Shares for each Randgold share.
Following the completion of the merger, Barrick Gold shareholders will own nearly 66.6% stake in the combined entity, while Randgold shareholders will hold about 33.4%.
Barrick Gold executive chairman John Thornton said: “The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry, bringing together the world’s largest collection of Tier One Gold Assets, with a proven management team that has consistently delivered among the best shareholder returns in the gold sector over the past decade.”
The merger is subject to approval by both sets of shareholders, regulatory approvals and other customary closing conditions.
It is expected to be completed by the first quarter of 2019.
The combined company is expected to own five of the world’s top ten Tier One Gold Assets by total cash cost, with two potential Tier One Gold Assets under development or expansion.
The Tier One Gold Assets will include Cortez, Goldstrike, Kibali, Loulo-Gounkoto and Pueblo Viejo.
After the merger, the company intends to implement a business plan that will focus on selling non-core assets over time.
Under the business plan, it will invest in a portfolio of Tier One Gold Assets and strategic assets with an emphasis on organic growth.
Randgold chief executive officer Mark Bristow said: ““Our industry has been criticised for its short-term focus, undisciplined growth and poor returns on invested capital. The merged company will be very different.
“Its goal will be to deliver sector leading returns, and in order to achieve this, we will need to take a very critical view of our asset base and how we run our business, and be prepared to make tough decisions.”
