Saracen swoops on Barrick stake in Super Pit for $1.1bn

Saracen Mineral Holdings has emerged as the successful bidder for Barrick Gold’s 50 per cent interest in the Super Pit gold mine in Kalgoorlie, Western Australia.

The transaction, which is expected to complete by the end of this year, is worth $US750 million ($1.1 billion) in cash, down from a 2017 price tag of $1.3 billion.

Barrick chief executive Mark Bristow said the sale of the company’s non-operating interest in the Kalgoorlie Consolidated Gold Mines (KCGM) joint venture represented the first step in its plan to dispose of non-core assets by the end of 2020.

The company has been looking to sell its half-share in the mine since 2016, but its efforts have been met with roadblocks.

Northern Star Resources was confirmed by Barrick as a bidder earlier this year. China’s Shandong Tyan Home, parent company of gold producer Minjar Gold, has also been outed as a bidder in the past, but walked away from the opportunity in 2017.

Bristow said Barrick was disinterested in being a passive investor in the Super Pit now that the company had relinquished its role as operator to JV partner Newmont Goldcorp.

“While this iconic gold mine has been a valuable contributor to Barrick over the years, the asset does not fit with our strategy of operating mines that we own,” Bristow said.

“The sale allows us to further focus our portfolio on core operations.”

The Canadian company announced earlier this month that production at Super Pit was unlikely to meet its guidance for 2019.

Bristow said Barrick was confident that Saracen would be an excellent partner at KCGM.

Saracen plans to raise around $796 million via an equity placement to partly fund the transaction, with the remaining funds to come from a $450 million loan.

Barrick will use the proceeds from the sale to strengthen its balance sheet and deliver stronger returns to shareholders.

The company has a number of North American assets that are considered core to the company, including the world’s single largest gold producing complex under the Nevada Gold Mines JV with Newmont Goldcorp.

Saracen operates the Thunderbox and Carosue Dam gold mines in Western Australia, the latter of which is around 100 kilometres from the Super Pit.

“We are proud to announce this acquisition which we believe will be transformational for Saracen and our shareholders,” Saracen managing director Raleigh Finlayson said.

“The Super Pit is a Tier 1 Australian gold mine with an outstanding track record of stable, large scale gold production and cash generation over many decades.

“It is an asset Saracen knows well and has admired for many years and we are confident it aligns with our clearly defined growth strategy.”

Newmont Goldcorp will remain the operator of the Super Pit and retains its 50 per cent share of the mine.

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