Newmont seen in strong position in Barrick Australian mine sale
By Nicole Mordant and Susan Taylor
VANCOUVER/TORONTO (Reuters) - Barrick Gold Corp's (ABX.TO: Quote) sale of its stake in Australia's Kalgoorlie mine should attract a string of suitors, but its partner Newmont Mining (NEM.N: Quote) may have an advantage over other bidders in the sale process, industry sources say.
Toronto-based Barrick said last week the time was right to sell its half of the so-called "Super Pit" gold mine, a stake analysts estimate is worth around $1 billion.
Newmont, which has publicly stated its interest in buying the 50-percent share it does not already own, is in a stronger position over rival bidders since taking over as operator of the mine last year.
Denver-based Newmont has "been there for some 20 years so they have the history behind them, they know the asset better than anybody. I would say they have an edge that way," Haywood Securities analyst Kerry Smith said.
Barrick's share of gold production at the Super Pit that it is looking to sell was 320,000 ounces in 2015 at all-in sustaining costs of $886 per ounce.
Newmont would keep its management rights and responsibilities after any potential deal, the company said in an emailed statement, letting it call the shots on spending and development plans.
Under the joint venture structure, Newmont has a right of first refusal on the asset, meaning if Barrick wants to sell its stake it must first offer it to Newmont, which has to make an all cash offer, a source familiar with the matter said.
But because the two miners hold the asset in a holding company, Barrick can get around Newmont's right by offering shares in the holding company to other interested parties, the source said. Continued...