Barrick Gold Corp. agreed to sell assets in Nevada to Kinross Gold Corp. and private equity firm Waterton Global Resource Management for $720 million, as the biggest bullion producer cuts debt after prices fell.
Kinross, which already owned half of the Round Mountain mine, will buy the other half from Barrick, as well as 100 percent of the Bald Mountain mine, for $610 million, the Toronto-based miners said last Thursday.
“It was a win for Barrick because they clearly realized more value for those assets than the market was giving them credit for,” Andrew Kaip, an analyst with BMO Capital Markets, said by phone from Toronto. BMO valued the non-core Nevada assets for sale at $440 million, Kaip wrote in a research note Thursday.
The agreements mean Barrick has announced asset sales, joint ventures and partnerships this year worth $3.2 billion as part of a $3 billion debt-reduction goal after bullion prices slumped about 40 percent from a record high in 2011. In July, the company sold a 50 percent stake in its Zaldivar copper mine in Chile to Antofagasta Plc for $1 billion. Earlier it sold half of its Porgera mine in Papua New Guinea to Zijin Mining Group Ltd.
Kinross and Barrick also agreed to form a 50:50 exploration joint venture for Bald Mountain. Barrick had also hoped to sell its Golden Sunlight mine and early-stage project Hilltop. The company “will continue to look at options to realize value from those assets,” spokesman Andy Lloyd said by e-mail.
Also, units of a Waterton fund will buy 70 percent of the Spring Valley project and all of the Ruby Hill mine for $110 million.
In the case of Ruby Hill, Waterton will be mining new areas that will require some additional permitting, Chief Investment Officer Isser Elishis said in a telephone interview. “We have expectations that this asset will go for decades to come.”
Spring Valley is a late-stage project that requires permits and a mine optimization plan, he said. The remaining 30 percent of that asset is held by Midway Gold Corp., which has signed a letter of intent to sell the stake to Waterton, the companies said in a separate statement late Thursday. The minimum purchase price will be $25 million, the statement said.
CIBC World Markets acted as financial adviser to Barrick, while Parsons Behle & Latimer and Davies Ward Phillips & Vineberg offered legal advice. RBC Capital Markets and TD Securities acted as financial advisers to Kinross, while Crowley Fleck were its legal advisers. Stikeman Elliot and Davis Graham & Stubbs acted as legal advisers for Waterton.