Barrick’s castoffs could spark gold mine rush

Industry players eye $4.5B worth of Australian mines to go for sale

Barrick Gold Corp.’s plan to sell a cluster of Australian mines under its proposed $17.8 billion (U.S.) hostile takeover offer for Newmont Mining Corp. is set to spark a flurry of intense dealmaking 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.

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.

Newcrest, which has previously said it is examining potential deals to improve the quality of its portfolio, could pay as much as $3 billion to $4 billion for the assets without significantly pressuring its balance sheet, Ord Minnett Ltd. said in a Monday note.

Evolution, Australia’s No. 2 producer, will “certainly be interested if he decided to dispose of those assets,” Klein said Monday, referring to Bristow’s remarks.

The producer has undertaken about $1.5 billion of acquisitions since April 2015, including the $550 million purchase of Barrick’s Cowal operation in Australia, and would be among a potentially small field of candidates with the capacity to quickly complete a deal, Klein said.