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Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Canada’s Barrick Gold’s (TSX, NYSE:ABX), the world’s No.1 producer of the precious metal by value, has confirmed it’s selling a 50% stake in its Veladero mine in Argentina to Shandong Gold Group in a transaction worth $960 million.
As part of the deal, which makes the two firms strategic partners, the Shandong province-based gold miner will help Barrick move forward with the long delayed Pascua-Lama gold, silver and copper project, straddling the border between Chile and Argentina.
Both companies, Barrick said in the statement, will also evaluate additional investment opportunities in the area, known as El Indio Gold Belt.
As part of their new partnership, the two firms will look at developing the stalled Pascua-Lama gold, silver and copper project, straddling the border between Chile and Argentina.
“Shandong is an ideal partner to help us unlock the untapped mineral wealth of the El Indio Belt over the long-term, while working with us to generate more value from the Veladero mine today,” Barrick executive chairman John L. Thornton said while signing the agreement.
“Today is the realization of a China Dream that Peter Munk, Barrick’s iconic founder, and I have shared since he first approached me about succeeding him as Chairman of Barrick,” he added.
Thornton noted the two companies met for the first time in April 2016, adding he could not think of a better way to celebrate their one-year anniversary.
Once the transaction is complete, a Joint Venture board consisting of three nominees appointed by each company will oversee Veladero mine. In order to ensure continuity of operations, both firms intend to maintain the mine’s current management team, they said.
The news comes barely a day after media reports hinted the two miners were about to announce a deal.
In the last few months, the Toronto-based miner has been aggressively looking to strengthen its position in Latin America.
In September, the gold miner appointed a new executive, George Bee, to lead the development of the Argentine side of the mothballed Pascua-Lama project.
A few months later, it hired a new director for the region — Pablo Marcet — with decades of mining experience in the geographic area.
And just last month, Barrick announced a 50-50 partnership with Goldcorp to develop projects in northern Chile, including Cerro Casale, one of the world’s largest gold-copper deposits.
Shandong, with a market value of almost $10 billion, produced 1.2 million ounces of gold last year. Its flagship project is an underground mine called Sanshandao.
5 Comments
2K
Only NOW they decide to sell it? If only they sold half of Pascua-Lama in 2006. Barrick has a history of awful market timing. Since Thornton came along in 2013, Barrick decided to sell off their non-risky assets (assets with great upside potential, may I remind you) at the worst possible time, when gold was in the crapper.
That being said, I applaud Thornton in pushing mining towards a digitization era. I hope he’s in it for the long-run, because Barrick’s executive turnover is too darn high, and as a long-term shareholder, I want long-term, sustainable returns. I do not want short-term gains if it means we’ll be shooting ourselves in the foot for a later time. The fact that Barrick executives (aside from Monk) have had such high turnover is evidence to suggest that management values to not align with shareholders. I genuinely hope Thornton’s values align with mine.
Gold_Min3r
Boo-hoo? You are not making enough money because the ex Goldman Sachs employee who knows as much about mining as any other hedge fund manager on Bay Street.
As much as I respect Peter Munk, he messed up with picking the last two CEO’s to run his company. A company like Barrick needs guidance from a person with a background in mining and has been through the cyclical nature of this industry and knows what decision needs to be made.
Shareholders such as you forget how much a mine like Veladero provides for the community surrounding the mine. It becomes the community’s livelihoods and can provide employment for multiple generations. When you sell the mine to a Chinese company, they can bring in cheap labour from China and the community is badly hurt.
Pascua Lama could have been the most remarkable mining project. I am a mining engineer and I have never seen a deposit like Pascua Lama. Greed of Argentinian police, Aaron Regent’s ego and rush to get into production killed that project.
Mark
Pascua Lama is just a stone’s throw away from going into production. No reason to ‘sell’ it.
Alex Mezei
Questionable timing on the sale-side (JV included) seems to be a reoccurring issue, and not only for Barrick, so it may not be specific to the company, not even to mining for that matter, regardless of the executives’ expertise. In fact, it does not have to be necessarily a negative in this particular case since Shandong is robust. Where I see bad news for Barrick is still on the project buy-in and execution areas. Poor planning and lack of coordination seem still unaddressed, particularly in the area metallurgical due diligence. People seem to ignore that process risk can negate the entire value of any project, even as promising as Donlin JV, the next-in-line sizeable project pending possible approval. My specific concern is based on the shortcomings of the most updated NI 43-101 TR, which I flagged as seriously under-documented metallurgically. As a result – the process risk is as clear as it gets, so it could potentially lead to a clear-cut write off. Too bad.
Kirill Klip
This deal will open new M7A wave in Argentina.
TNR Gold: McEwen Mining Moves Giant Los Azules Copper Forward With Exploration And New PEA Study.
http://kirillklip.blogspot.co.uk/2017/07/tnr-gold-mcewen-mining-moves-giant-los.html