Barrick Mining Corp. ABX-T -1.74%decrease is selling Hemlo, its only Canadian mine, to Carcetti Capital Corp. CART-H-X +2.50%increase for up to US$1.09-billion.
Toronto-based Barrick put Hemlo up for sale earlier in the year, deeming it a “non-core” asset.
Carcetti will pay Barrick US$875-million, and US$50-million in its shares upfront. Additionally, Barrick stands to receive up to US$165-million contingent on production from the mine and the price of gold over a five-year period.
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Barrick in a release said the proceeds will further strengthen its balance sheet, and support its commitment to return capital to shareholders.
Earlier this year, it sold its 50-per-cent stake in the Donlin gold project in Alaska for US$1-billion.
Fahad Tariq, an analyst with Jefferies, said in a note to clients that Barrick is selling at an attractive valuation and that stock buybacks from the Hemlo sale make sense given that its shares trade at a steep discount to its peers.
Barrick announced the Hemlo sale days after Canada’s Teck Resources Ltd. TECK-B-T +1.34%increase agreed to a takeover by Britain’s Anglo American PLC. NGLOY -1.67%decrease for roughly US$20-billion. Some market watchers have speculated that Barrick could launch a rival proposal for Teck. London-based Anglo is not paying a premium for Teck, leaving an opportunity for other bids to surface.
Barrick has made no secret of its desire to grow its copper business. The company recently changed the name of the company from Barrick Gold to Barrick Mining as a reflection of its increased focus on copper. Barrick already operates copper mines in Zambia and Saudi Arabia, and it has started construction on a gigantic new copper and gold mine in Pakistan.
The world’s biggest gold miners are streamlining their portfolios to zero in on their biggest and most profitable operations, and cashing out during a time of record high gold prices.
Late last year, Denver-based Newmont Corp. NGT-T -0.62%decrease, the world’s biggest gold miner, sold its Musselwhite mine in Ontario to Vancouver-based Orla Mining Ltd. NGT-T -0.62%decrease for around US$850-million.
Carcetti Capital plans to change its name to Hemlo Mining Corp. after the transaction with Barrick closes. Its management and board includes former Teck geologist Robert Quartermain. Later in his career, he founded gold miner Pretium Resources Inc., which was acquired by Australia’s Newcrest Mining Ltd. He was also previously the CEO of SSR Mining Inc.
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