‘Completely Aligned’: Barrick and Newmont Settle Nevada Gold Mines Dispute

US$4B agreement paves the way for Barrick’s North American IPO

Barrick Mining Corporation (TSX: ABX/NYSE: B) and Newmont Corporation (NYSE: NEM) announced on Monday that they had settled a dispute over their Nevada Gold Mines joint venture.

In February, Newmont revealed it had sent a notice of default to Barrick under the NGM joint venture agreement, expressing concern about the operation and management of NGM due to “a degradation in performance and subsequent asset value over the past six years”.

Under the agreement announced on Monday, excluded properties, including Barrick’s Fourmile and Newmont’s Fiberline and Mike developments, will be contributed into the JV.

With the resolution of all outstanding disputes and contribution of excluded properties, Newmont has provided its consent to Barrick’s proposed initial public offering of its North American gold assets.

The agreement includes enhanced governance provisions under a modernised JV agreement and provides for the payment of US$1.95 billion cash from Newmont to Barrick within 30 days to reflect the contribution of excluded properties.

Barrick CEO Mark Hill kicked off the company’s Q2 conference call on Monday by going “off script straight away to make the lawyers nervous”.

“I want to clarify a few misconceptions here. So firstly, the total value of that package is approximately US$4 billion,” he said.

“Obviously it includes the proportion of Fourmile, but it also includes contribution of Newmont’s properties, Mike and Fiberline, which I think is around 6.4 million ounces as well.

“It is also the cost of resolving historical disputes and litigation between the joint venture partners, and it also reduces the friction costs of the planned IPO, which will unlock even greater value for the shareholders beyond the cash proceeds from the transaction, and as we’ve said, they will be largely returned to the shareholders.”

Hill said Barrick and Newmont were now completely aligned as partners, which would allow for the optimisation of NGM, including potentially bringing Fourmile forward.

“NGM has a lot of opportunity. There’s been no increase in processing capacity there for years. We’re dealing with 25-year-old infrastructure, and then we have something like Fourmile that comes in, which is a world class asset,” he said.

“My discussions with Natascha [Viljoen] and Newmont right from the word go was how do we get this together so we can optimise NGM?

“And by optimise, I want to look at increasing processing capacity, I want to stop trucking ore all over the state and the only way I can do that is if we combine all these assets now and work together to see if we can justify a roaster or an autoclave and what we need to build.

“Where we’ve landed now, at least we’re in a position, in my view, to add a lot of value very quickly without getting into these disputes about allocation of resources, and obviously, there’ll be a lot of synergies as well … and that was obviously my ultimate goal.”

IPO advancing

With Newmont’s consent received, Barrick said it was on track to complete the IPO of its North American assets, comprising its 61.5% stake in NGM and 60% stake in Pueblo Viejo in the Dominican Republic, by the end of the year.

Hill said all operating and separation agreements between Barrick and the spin-off company had been completed and the company was close to filing formal documents with the US Securities and Exchange Commission.

Barrick will retain 90% of the company with the proceeds to be returned to shareholders.

Bloomberg reported on Sunday that multiple institutional investors, including Franklin Equity Group, were opposed to the plan.

“With the IPO, we’re building the only major American pure gold company with high-quality, long-life assets, so this is exactly what investors, including some of the world’s fastest growing source of capital, are looking for,” Hill said.

Hill will be the CEO of the new company upon separation.

He said the recruitment of a new CEO for the parent company was advanced with an announcement expected shortly.

Hill confirmed there were both internal and external candidates.

“My preference is always internal, but at this stage we haven’t got to that conclusion yet.”

Guidance met

Barrick reported Q2 gold production of 796,000 ounces of gold, up 11% quarter-on-quarter and exceeding guidance of 730,000-770,000oz.

The result was driven by the ahead-of-schedule ramp-up at Loulo-Gounkoto, a faster-than-expected recovery at Pueblo Viejo following planned maintenance, and record underground tonnes at Cortez as Goldrush continues to ramp up.

The company also produced 56,000 tonnes of copper.

All-in sustaining costs rose to US$1866 an ounce of gold from US$1708/oz in Q1.

Net earnings rose 50% year-on-year to US$1.22 billion, while adjusted net earnings per share rose by 74% year-on-year to US82c.

Hill noted the earnings result was in line with consensus, despite some media reporting it as a miss.

The company generated US$1.7 billion in operating cashflow, US$1.12 billion in attributable operating cashflow and US$141 million in attributable free cashflow.

Barrick declared a quarterly dividend of US17.5c per share

In addition to the quarterly dividend, Barrick repurchased US$1.209 billion of shares during the quarter under the previously announced US$3 billion share repurchase program.

Barrick reiterated 2025 guidance of 2.9-3.25 million ounces of gold at AISC of US$1760-1950/oz and 190,000-220,000t of copper at AISC of US$3.45-3.75 per pound.

Attributable capital expenditure guidance was reduced to US$3.8-4.2 billion from US$4-4.45 billion.

Hill said the reduction was a result of a decision not to start building Reko Diq in Pakistan this year while the asset remained under review.