GOLD Randgold Resources Limited ADS Each Represented BY One Ordinary Share (delisted)

  By David Hodari 
 

Barrick Gold Corp. (ABX.T) has agreed to buy Randgold Resources Ltd. (RRS.LN) for $6 billion in an all-share merger that will create the world's largest gold company worth $18 billion, with a dominant position in Africa. Barrick shareholders will own 67% of the combined company, and Randgold investors will own 33%, the companies said Monday, but the deal remains subject to shareholder approval. Here are some highlights from the two companies' merger call:

John Thornton, Executive Chairman for Barrick Gold:

"We both employ a decentralized business model, a small high-quality corporate office focused on the disciplined allocation of human and financial capital. We are both obsessed with talent and relentless in our pursuit of operational excellence. We are both committed to financial prudence--particularly in maintaining a strong balance sheet. Perhaps most important, we are of one mind about the true source of shareholder value in the gold industry per share returns over the long-term as measured by growth in free cashflow per share."

Mr. Thornton on the advantages of the deal:

Randgold has a proven ability to operate successfully in some of the most challenging environments in the world, while Barrick has been building relationships of depth and trust with China, which we believe offers financial and political risk mitigation. combination of these two strengths has a competitive advantage... The combined company will have five of the world's top 10 tier one gold assets like total cash cost. We will have the lowest total cast cost position among the senior gold peers, and we have the potential to add to these tier one assets with extensive land positions in many of the world's most prolific gold districts..."

Mark Bristow, Chief Executive Officer for Randgold Resources:

"Barrick already holds 3 of the world's 10 Tier 1 assets based on the life-of-mine, cost, and production metrics, and Randgold will contribute 2 additional Tier 1 assets. The combined portfolio also includes several projects and recent discoveries that will support Barrick's market leadership far into the future. Beyond these holdings, the company has the opportunity to build on existing partnerships and support alternate value initiatives. Likewise, the copper portfolio is rich in opportunities for investing in a high demand of metal closely affiliated to gold."

Mr. Bristow on Barrick's new focuses:

"Barrick will focus on four things. The development of core assets and the sale of non-core assets, continuing to de-centralize management with mine-based decision-making, streamlining all operations, and maintaining a powerful balance sheet supported by continued investments. There's going to be a significant potential to rewrite over time given the quality of the combined asset base and the proven management team. We will have the lowest total cash cost and the highest adjusted EBITDA margin relative to other senior gold peers."

On the prospect of non-core disposals:

"John has already signaled noncore assets in the sense of the Australian investments and the Papua New Guinea investments and both of those have strong partners, and both partners have indicated an interest to try to acquire those assets...we see a huge opportunity to work with Acacia and see how we can bring that to account which has become a bit of an orphan in the portfolio. We do have two copper assets that will be managed by the African team, and those assets will be as we believe there's an opportunity to really lift them up and bring them, really understand them and then we'll take that from then and I'll come back to the copper point in a bit."

On potential synergies:

"There are synergies, very clear synergies in Africa particularly because we can operate the entire portfolio that will be double in size with exactly the same structures, corporate infrastructure, everything else. So, there will be real synergies and as we progress collectively to find a solution that really delivers better value and more transparency in Tanzania. We will unlock many synergies we believe. On the other side, we've got benefits, maybe not by definition synergies, and that is one of the things that we've found and what we knew as well is Barrick's open cost skills in the way they manage the dispatch system, everything is leading in the industry in all aspects. And as you know, we've become very efficient underground miners."

Write to David Hodari at david.hodari@wsj.com

(END) Dow Jones Newswires

September 24, 2018 08:08 ET (12:08 GMT)

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