G Augusta Gold Corp

By Jacquie McNish 

TORONTO -- Barrick Gold Corp. said it may pursue a merger with rival Newmont Mining Corp. -- a potential blockbuster deal that would unite the world's two biggest gold producers and cap a flurry of recent, big acquisitions by gold miners.

Barrick, with a market value of almost $23 billion, said it is reviewing a merger with Newmont, valued at about $19 billion, in an all-stock, no-premium transaction. Barrick hasn't yet initiated discussions with Newmont, two people familiar with the matter said. Newmont wasn't immediately available to comment.

The move comes on the heels of Newmont's own big deal -- and threatens to complicate it. The Denver-based miner agreed earlier this year to buy gold mining company Goldcorp Inc. in a stock deal worth $10 billion. That deal was set to make Newmont the biggest gold miner by production, passing long-time rival Barrick, which has suffered years of falling output.

Toronto-based Barrick has long considered a merger with Newmont to consolidate their separate, large gold mining operations in Nevada and create an industry giant that would far outstrip its nearest competitor. The last serious attempted combination faltered in 2014.

Newmont and Goldcorp produced a combined 7.9 million troy ounces of gold in 2017. Barrick was the undisputed king of gold production until recently, but its output has fallen more than 25% since 2013, to 5.3 million troy ounces at the end of 2017 -- about the same as Newmont by itself. Barrick's acquisition of Randgold added about 1.3 million troy ounces as of the end of 2017.

Barrick's renewed interest in its rival reflects heightened pressure to reduce rising costs for ore extraction and production at a time when gold prices are languishing and reserves are shrinking.

Mark Bristow, Barrick's chief executive, said recently that to lower costs, "it makes sense to work it out" with its competitor.

Mr. Bristow also said that by the end of 2020 he wants to eliminate $200 million in expenses at the company. He was named CEO in January after Barrick and Randgold Resources merged, a $6 billion all-stock deal Barrick struck late last year.

Barrick shares fell in early New York trading, losing more than 2%. Newmont shares were up more than 4%.

Barrick is seeking to shed a number of non-core mining properties and any merger with Newmont would likely trigger a fresh wave of gold property sales. If Newmont resists Barrick's entreaties, Barrick may also recruit partners in any unsolicited bid. One possible partner: Australia's Newcrest Mining Ltd.

It walked away from discussions to merge with Toronto-based Goldcorp last year, paving the way for the Newmont bid, a person familiar with the matter said.

--Alistair MacDonald contributed to this article.

Write to Jacquie McNish at Jacquie.McNish@wsj.com

(END) Dow Jones Newswires

February 22, 2019 11:26 ET (16:26 GMT)

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