New Barrick Group likely to divest US$2.6B of gold assets

By Gregory Rodwell | Tuesday, 16 October 2018 12:56 PM ET

Barrick Gold Corp. and Randgold Resources Ltd.'s press releases related to their proposed merger make it clear that the new group will focus on its large, long-life and low-cost assets, which will leave US$2.6 billion in net present value distributed across the new company's remaining gold assets, which are likely to be divested at some point. The releases also indicate that the new group will hold on to its copper business, which has an NPV of US$2.3 billion. We look at how Barrick and Randgold define their categories and where all these assets fall on the cost curve and take a closer look at the assets that could be divested.

Though the recent announcement of the proposed merger between Barrick Gold and Randgold took the market by surprise, much of the strategy outlined in the released documents is very similar to what Barrick Executive Chairman John Thornton discussed in August.

Essentially, Barrick was and is only interested in two kinds of assets.
The first type, "tier one" assets:

have an annual gold production over 500,000 oz
have over a 10-year mine life
lie in the bottom half of the cost curve

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New Barrick Group likely to divest US$2.6B of gold assets

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