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Barrick Gold (TSX:ABX)(NYSE:GOLD) announced on Monday a C$23.4 million ($17m) investment in Hercules Silver (TSX-V: BIG), boosting its stake in the junior miner to about 12% from the current 2.7% on a non-diluted basis.
The world’s no. 2 bullion producer said it had agreed to subscribe for about 21.3 million units of Hercules as part of a private placement for C$1.10 a unit, set to close on or before Wednesday.
The agreement comes after Hercules in late March moved to raise C$5 million in a fully marketed private placement, with proceeds earmarked for exploration and working capital. The company is focused on exploring and developing the Hercules Silver project in Idaho.
It also comes on the same day that Newmont (NYSE: NEM)(TSX: NGT), the world’s top gold miner, announced it had closed its roughly $15 billion acquisition of Newcrest Mining.
Chief executive Mark Bristow, a serial dealmaker by nature, made a $17.8 billion hostile bid for Newmont in 2019. The deal eventually fizzled, but that ended with the companies forming a Nevada joint venture.
Barrick also attempted earlier this year to take over Canada’s First Quantum to expand its foothold into copper. The company is now focused on finding or growing its stakes in gold and copper assets, but not necessarily through mergers and acquisitions.
“I’ve always said that the best assets that we haven’t got are the other parts of our joint ventures,” Bristow said in February. “If there was a way of acquiring those assets I think we would be desirous of acquiring them.”
Provided Barrick keeps a stake of at least 5% in Hercules, the gold giant will have the right of first refusal in respect to a sale by Hercules of any interest in the Idaho project.
Barrick also over a three-year period agrees to vote its Hercules shares based on the recommendations of Hercules’ board or management and abstain from voting on matter and is subject to a standstill agreement prohibiting it from buying more than 19.9% of Hercules’ outstanding shares.
