Goldcorp and Barrick Gold to Jointly Develop Cerro Casale

Goldcorp will form a 50-50 joint venture with Barrick Gold for the Cerro Casale project, which will help jointly advance the project.

Anuradha Garg - Author

Mar. 30 2017, Updated 12:10 p.m. ET


Goldcorp’s acquisitions

On March 28, 2017, Goldcorp (GG) made three significant announcements in two separate releases:

  • It will acquire from Kinross Gold (KGC) a 25.0% interest in the Cerro Casale project in Chile and a 100% interest in the Quebrada Seca exploration project adjacent to Cerro Casale.
  • It will acquire an additional 25.0% interest in Cerro Casale from Barrick Gold (ABX), which holds a 75.0% interest in the project.
  • It will acquire Exeter Resource (XRA) and its 100% owned Caspiche project. This junior miner’s only project is located in the Maricunga Gold Belt in Chile, which is ~10.0 kilometers north of Cerro Casale.
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How much will these transactions cost GG?

All these transactions will cost Goldcorp ~$1.0 billion. The acquisitions of assets from Kinross Gold will cost $260.0 million in an initial cash payment along with other contingent payments. The acquisition of Barrick Gold’s interest in the project will cost $260.0 million, which will be settled through the acquisition of 100% of Cerro Casale and the transfer of a 50.0% interest in Quebrada Seca to Barrick with no additional consideration. Goldcorp will acquire Exeter for a total payment of $185.0 million.

Jointly developing Cerro Casale

As a result of these transactions, Goldcorp will form a 50-50 joint venture with Barrick for the Cerro Casale project, which will help jointly advance the project. Commenting on these transactions, Goldcorp’s president and CEO (chief executive officer) David Garofalo said, “The joint venture with Barrick has the potential to allow us to consolidate infrastructure to reduce capital and operating costs, reduce the environmental footprint and provide increased returns compared to two standalone projects. With our combined technical and financial strength, we see significant potential to advance these projects and increase net asset value per share over time, delivering value for all partners and stakeholders.”

In this series, we’ll look at the pros and cons of these transactions and what they mean for the futures of Goldcorp and Barrick Gold.

In the next part of this series, we’ll see these miners’ (GDX) price reactions to the acquisition announcements.


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