Gold miners Randgold and Barrick agree $18bn all-share merger

Gold miners Randgold and Barrick agree $18bn all-share merger

John Thornton, the former Goldman Sachs executive and executive chairman of Barrick, will become executive chairman of the combined business. This lack of a premium for Randgold shareholders prompted scepticism from some analysts who were also concerned that Randgold's agility could be bogged down by the mammoth Barrick.

Barrick shareholders will own about two-thirds of the new entity and Randgold investors the remainder, the two companies said in a statement on Monday.

Barrick's majority-owned Acacia Mining Plc has been stuck in limbo after Tanzania imposed a ban on exports of mineral concentrates in 2017 and slapped a US$190 billion tax bill on the London-listed company.

The combination creates an $18.3 billion gold-mining giant.

"Our industry has been criticised for its short-term focus, undisciplined growth and poor returns on invested capital".

Its shares were trading 6% higher in the wake of the announcement.

Barrick and Randgold are hoping that joining forces and combining their huge resources will help them weather the storm.

However, they also announced the new company's shares would be traded in NY and Toronto, meaning Randgold's London listing on the FTSE 100 would be cancelled if the deal went ahead, as planned, early next year.

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Bristow, a 59-year old trained geologist, has been at the helm of Randgold since its inception in 1995 and is known for his straight-talking, hands-on approach to running the company.

"Mr Bristow has struck gold, in a sense, as he now becomes the boss of the world's biggest gold miner", said AJ Bell investment director Russ Mould.

Barrick's gold production fell to 5.3 million ounces in 2017, from more than 8 million ounces a decade earlier, according to data compiled by Bloomberg.

The new group will consider selling non-core assets over time. The combined companies would also have the lowest cash cost position among its peers.

Barrick and Shandong Gold tied up for the first time past year, creating a 50-50 joint venture at the Veladero mine in Argentina.

The deal is subject to approval by the shareholders of both companies, regulatory approvals and other customary closing conditions.

"From Randgold's perspective the deal diversifies exposure away from high-risk African markets and towards Barrick's more stable North American assets".

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