NEWMONT SAYS NO THANKS TO MERGER WITH BARRICK.

CEO casts doubt on ‘damaged’ assets

• Newmont Mining Corp. officially rejected a US$17.8 billion hostile bid from Barrick Gold Corp. on Monday as its chief executive Gary Goldberg went on the offensive.

In a call with investors and an interview, Goldberg questioned why Barrick has not issued guidance beyond 2019 and suggested the company’s assets are in worse shape than has been publicly disclosed.

“Barrick has a problem and that’s why they need to push this,” he told the Financial Post.

The bid by Barrick, which represents an eight per cent discount to the value of Newmont’s shares on the day it was proposed, has the potential to reshape the gold mining industry by creating an estimated US$42 billion company — which would be multiple times larger than its next nearest competitor. Such a deal could also set a precedent for other companies in the sector to propose no-premium or even negative-premium acquisitions of gold companies.

For Newmont, there is even more at stake. It is working to close a US$10 billion acquisition of Goldcorp Inc. by April, which could be derailed if Barrick can entice its shareholders to vote down the deal.

Newmont and Barrick, the two largest gold companies in the world, discussed a combination in 2014, but those talks fell apart. Both have assets in Nevada, which many analysts believe would make sense to combine.

Now, B a r r i c k ’s chief executive Mark Bristow, who joined the company in January after his former company, Randgold Resources Inc., was acquired in a US$6 billion transaction, has revived the idea of combining both companies, citing an estimated $4.7 billion in synergies in Nevada alone, and $7.1 billion in total over the next two decades.

Bristow has said he is proposing a megamerger so quickly into his tenure because Newmont would become unattractive if it acquires Goldcorp’s assets, but Goldberg pushed back against the claim.

In a conference call on Monday morning, Newmont released correspondence from May 2017, in which Bristow wrote an email to Goldcorp chairman Ian Telfer saying that his company had “a strong portfolio of assets in world-class districts” and suggested some sort of tie-up with his thencompany Randgold.

BARRICK HAS A PROBLEM AND THAT’S WHY THEY NEED TO PUSH THIS.

Goldberg said the letter from Bristow shows that Goldcorp’s assets are highly desirable. He also said that Bristow went hostile in his bid for Newmont so soon into his tenure at Barrick because Barrick’s assets are more “damaged” than the company has let on, noting it hasn’t released guidance beyond the next 12 months.

“Mark got there, looked under the hood and saw the engine was missing,” said Goldberg.

Meanwhile, Bristow released his own statement accusing Newmont of making unfair demands in its negotiations to create a joint venture to manage both companies’ assets in Nevada.

“Nevada, with a combined 76 million ounces, will be worth a lot more if it is run by one operator,” Bristow said in a statement. “We know we can do that more efficiently than Newmont.”

Newmont stock rose 1.8 per cent to US$34.45 on the New York Stock Exchange, while Barrick was up 1.6 per cent to $16.62 in Toronto.