Barrick Mining (B.US) stock price plummeted by US$1.95 billion and settlement was accused of being “too low”

The Zhitong Finance App learned that Barrick Mining (B.US) closed down 6.4% on Monday because investors were disappointed with its settlement agreement with Newman Mining (NEM.US), which aims to resolve a dispute between the two companies over a Nevada gold joint venture, thus paving the way for Barrick Mining to push for the listing of its North American mining assets in the US. Newman Mining closed up 3.8%.

Under an agreement announced Monday, Newman Mining will pay Barrick Mining $1.95 billion, while the two companies will inject assets not previously included in the joint venture into the joint venture, including Barrick Minings' Fourmile project and Newman Minings' large-scale Fiberline and Mike gold development projects.

Analysts Grant Spore and Emmanuel Montgeri said, “Considering the quality of the assets, even though this deal clears the key barriers to North American IPOs and reshapes the relationship with Newman Mining, the transaction amount still seems a bit low. ”

Although the settlement clears up barriers for Barrick Mining's gold asset IPO in North America, Citi analyst Alexander Hagin said that the transaction amount “may be lower than some investors' expectations” because “investors generally believe Fourmile's assets are worth about $10 billion to $20 billion,” and Newman Mining's payment for 38.5% equity “may be between $4 billion and $8 billion.”

TD Cowen analyst Steven Greene said Newman Mining's acquisition of shares in the Nevada joint venture was a big bargain because the $1.95 billion paid to Barrick was “far below” the $6.6 billion intrinsic value he gave to Fourmile's 38.5% stake, which gave Newman Mining a “very attractive price” and is expected to increase its valuation by $4.7 billion.

Greene said that by injecting the Fourmile project into the Nevada joint venture, Barrick is also expected to benefit. This should eliminate expensive feasibility studies, utilize existing local infrastructure, and potentially save more than 1 billion US dollars for the joint venture.