Gold's Next Fight: Barrick-Newmont's $4.5 Billion Castoffs

Barrick Gold Corp.’s plan to sell a cluster of Australian mines under its proposed $17.8 billion hostile takeover offer for Newmont Mining Corp. is set to spark a flurry of intense deal-making for the castoffs.

Toronto-based Barrick has already had “many conversations with interested parties” about assets that would be discarded should the combination of the two largest producers go ahead, Chief Executive Officer Mark Bristow said in an interview. “There’s a very good chance that some Australian operators will be involved.”

Evolution Mining Ltd. will review any sales of assets in Australia that have been earmarked to be hived off, according to Executive Chairman Jake Klein. It’ll most likely be challenged by rival local producers Newcrest Mining Ltd.and Northern Star Resources Ltd., as well as potentially Johannesburg-based AngloGold Ashanti Ltd., UBS Group AG analyst Daniel Morgan said by phone.

Newmont has three major mines in Australia’s Northern Territory and Western Australia, including a joint venture with Barrick in the Kalgoorlie Super Pit, which produce an annual total of about 1.8 million ounces for the two companies. The operations have a net asset value of about $4.5 billion, according to RBC Capital Markets.

Northern Star and Newcrest declined to comment. AngloGold is “currently not in the market for asset purchases, given our focus on the strong internal pipeline of opportunities we have,” the company said in an email.

Australia Discards

The assets are “very profitable” and it’s probably appropriate to put them “into the hands of Australians who know how to operate in Australia,” Bristow said Monday at an industry conference in Hollywood, Florida. He described Newmont’s Boddington operation as a so-called tier-one asset, or one of the industry’s best mines.

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