Mark Bristow. Picture: HALDEN KROG/BLOOMBERG
Mark Bristow. Picture: HALDEN KROG/BLOOMBERG

Bengaluru — Canadian gold miner Barrick Gold moved closer to its asset sales target on Tuesday by agreeing to sell its 90% stake in its Massawa project in Senegal to Teranga Gold for up to $430m.

The sale is the latest by Barrick CEO Mark Bristow as he seeks to shed at least $1.5bn of unprofitable mines by the end of 2020, following the company’s merger with Randgold Resources in January 2019.

The Canadian miner in November sold its half of the Kalgoorlie Super pit gold mine to Australia’s Saracen Mineral Holdings for $750m.

Barrick could also look to sell its Tongon mine in Ivory Coast and its Lumwana copper project in Zambia, analysts have said.

Barrick shares were up 1.2% in early Toronto trading while the benchmark Canadian share index was flat.

Tuesday’s deal includes an upfront cash payment to Barrick of $300m and Teranga shares worth $80m, giving Barrick close to an 11.5% stake in the miner.

Gold miners have notched transactions worth more than $30bn in 2019 as they seek to replace dwindling reserves and win back investors.

The consolidation has also led to a raft of mine sales around the world as top miners Barrick and Newmont Gold focus on their best performing assets.

“You’ve seen a lot of these seniors consolidate and there are non-core assets for them that are quite meaningful for other companies like ourselves,” Teranga CEO Richard Young said on Tuesday.

The price also includes a contingent payment of up to $50m based on the average gold price for the three years from when the deal closes, the companies said.

Credit Suisse analyst Tariq Fahad said Barrick had now achieved 79% of its divestment target when the value of Teranga shares was included.

Barrick will have the right to nominate one Teranga director for as long as it retains at least a 10% equity interest in Teranga.

Teranga said it plans to combine the Massawa project with its flagship Sabodala gold project, creating a low-cost mid-tier producer with higher production and lower costs.

The company will invest up to $10m  to begin processing ore from Massawa in the second half of 2020, Young said.

Barrick can increase its stake in Teranga after 18 months according to a standstill agreement reached by the companies.


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