Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) today announced it
has reached an agreement to sell its 100% interest in the Lagunas
Norte mine in Peru (“Lagunas Norte”) to Boroo Pte Ltd (Singapore)
(“Boroo”) for a total consideration of up to $81 million, plus
the assumption by Boroo of Barrick’s closure liability relating to
Lagunas Norte of $226 million backed by an existing
$173 million bonding obligation.
The total consideration consists of an up-front
cash payment of $20 million, additional cash consideration of
$10 million payable on the first anniversary of closing and
$20 million payable on the second anniversary of closing, a 2%
net smelter return royalty (“NSR”) on gold and silver produced
through the refractory sulphide ore project (“PMR”), which will
terminate once one million ounces of gold has been produced
and which may be purchased by Boroo for a limited period of time
after closing for $16 million, plus a contingent payment of up
to $15 million which is based upon the average gold price
per ounce for the two-year period immediately following
closing (“Average Gold Price”). The contingent payment, which is
payable two years following closing, is $5 million if the
Average Gold Price is greater than $1,600 and less than $1,700;
$10 million if the Average Gold Price is greater than $1,700
and less than $1,800; and $15 million if the Average Gold
Price exceeds $1,800.
Boroo will also assume 100% of the
$173 million reclamation bond obligations for Lagunas Norte in
two tranches: 50% on closing and 50% within one year of closing.
The deferred payments, the contingent payments, and the obligation
to replace the second tranche of the reclamation bond obligations
will be secured.
Barrick president and chief executive Mark Bristow
said the sale was in line with Barrick’s policy of selling non-core
interests — a process which has already realized some
$1.5 billion — in order to focus its portfolio on Tier One1
assets. The proposed acquisition would benefit the mine’s
stakeholders in Peru by giving Boroo the opportunity to extend its
life by accessing satellite resources and adapting the
infrastructure.
The Latin American region remains an important
destination for Barrick, and the company will keep a team in Peru
to continue to develop its portfolio of exploration assets and to
pursue opportunities to find and operate world-class gold and or
copper mines in that country.
The transaction is subject to closing
conditions.
Boroo, formerly known as OZD
ASIA PTE Ltd, is a privately-held investment holding
company principally engaged in operating, developing and acquiring
gold properties globally. Boroo owns and operates various
production-stage and development-stage assets in Central Asia.
TD Securities Inc is acting as financial adviser to
Barrick. Lawson Lundell LLP and Rodrigo, Elias & Medrano
Abogados are acting as legal counsel to Barrick.
Cormark Securities Inc is acting as financial
adviser to Boroo. Stikeman Elliott LLP, Ashurst LLP and Payet, Rey,
Cauvi, Pérez Abogados are acting as legal counsel to Boroo.
Enquiries:
President and CEOMark Bristow+1 647 205 7694+44
788 071 1386
SEVP Strategic MattersKevin Thomson +1 416 307
5150
Investor and Media RelationsKathy du Plessis+44
20 7557 7738Email: barrick@dpapr.com
Website: www.barrick.com
Endnote 1
A Tier One Gold Asset is an asset with a reserve
potential to deliver a minimum 10-year life, annual production of
at least 500,000 ounces of gold and total cash costs per ounce over
the mine life that are in the lower half of the industry cost
curve.
Cautionary Statement on Forward-Looking
Information
Certain information contained in this press
release, including any information as to Barrick’s strategy, plans,
or future financial or operating performance, constitutes
“forward-looking statements”. All statements, other than statements
of historical fact, are forward-looking statements. The words
“agreement”, “estimated”, “will”, “contingent”, “proposed”,
“extend”, “opportunity”, “develop” and similar expressions identify
forward-looking statements. In particular, this press release
contains forward-looking statements including, without limitation,
with respect to: estimated total cash consideration from the sale
of the Lagunas Norte mine, including contingent payments; expected
timing for the assumption by Boroo of 100% of the reclamation bond
obligations for Lagunas Norte; the anticipated timeline for the
closing of the transaction; and anticipated benefits from the
transaction including the potential extension of the life of the
Lagunas Norte mine and related benefits for the community and
country.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions; including material
estimates and assumptions related to the factors set forth below
that, while considered reasonable by Barrick as at the date of this
press release in light of management’s experience and perception of
current conditions and expected developments, are inherently
subject to significant business, economic, and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements, and undue reliance should not be
placed on such statements and information. Such factors include,
but are not limited to: fluctuations in the spot and forward price
of gold, copper, or certain other commodities (such as silver,
diesel fuel, natural gas, and electricity); timing of receipt of,
or failure to comply with, necessary permits and approvals,
including with respect to the assumption of closure obligations;
the speculative nature of mineral exploration and development;
changes in mineral production performance, exploitation, and
exploration successes; diminishing quantities or grades of
reserves; changes in national and local government legislation,
taxation, controls, or regulations and/or changes in the
administration of laws, policies, and practices, expropriation or
nationalization of property and political or economic developments
in Peru; lack of certainty with respect to foreign legal systems,
corruption and other factors that are inconsistent with the rule of
law; failure to comply with environmental and health and safety
laws and regulations; litigation and legal and administrative
proceedings; risk of loss due to acts of war, terrorism, sabotage
and civil disturbances; damage to Barrick’s reputation due to the
actual or perceived occurrence of any number of events, including
negative publicity with respect to the Barrick’s handling of
environmental matters or dealings with community groups, whether
true or not; employee relations including loss of key employees;
business opportunities that may be presented to, or pursued by,
Barrick; our ability to successfully complete divestitures; and
availability and increased costs associated with mining inputs and
labor. In addition, there are risks and hazards associated with the
business of mineral exploration, development, and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding, and gold bullion, copper
cathode, or gold or copper concentrate losses (and the risk of
inadequate insurance, or inability to obtain insurance, to cover
these risks).
Many of these uncertainties and contingencies can
affect our actual results and could cause actual results to differ
materially from those expressed or implied in any forward-looking
statements made by, or on behalf of, us. Readers are cautioned that
forward-looking statements are not guarantees of future
performance. All of the forward-looking statements made in this
press release are qualified by these cautionary statements.
Specific reference is made to the most recent Form
40-F/Annual Information Form on file with the SEC and Canadian
provincial securities regulatory authorities for a more detailed
discussion of some of the factors underlying forward-looking
statements, and the risks that may affect Barrick’s ability to
achieve the expectations set forth in the forward-looking
statements contained in this press release.
Barrick disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
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