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Is Barrick Worth a Look after Its Merger with Randgold?

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Barrick-Randgold merger complete

The Barrick Gold–Randgold Resources (GOLD) merger recently completed, with the trading of new shares starting on January 2, 2019. The new company’s name remains Barrick, but its symbol will now be GOLD—previously Randgold’s symbol on the NASDAQ—on the NYSE.

Randgold’s London listing has been canceled. The new company’s executive chair will be John Thornton, and its CEO will be Mark Bristow, former CEO of Randgold.

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Leading market position

On September 24, Barrick Gold agreed to acquire Randgold Resources in a share-for-share deal. The merger has created a sector-leading gold company that owns five of the industry’s top ten Tier 1 gold assets. Along with owning five of the top ten Tier 1 gold assets (GLD), the combined company will have two high-potential Tier 1 assets in Fourmile and Turquoise Ridge.

The combined entity has a market cap of ~$23.75 billion. It will also have the largest gold reserves among its senior gold peers (GDX) (NUGT). Moreover, Barrick has the lowest total cash cost position among its peers.

Shareholder returns

Proven management should drive returns, successful exploration, cost reduction, and efficiency throughout the new company’s combined asset portfolio. In a joint letter, Thornton and Bristow said that Barrick is placed to become the world’s most valued gold mining business, saying, “We will do so by optimising our existing operations, pursuing new opportunities that meet strict investment criteria and developing them with disciplined efficiency.”

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