Barrick (ABX) Inks Deal To Acquire 19.9% Stake In Midas Gold
Zacks Investment Research | May 09, 2018 11:28PM ET
Barrick Gold Corporation (NYSE:ABX) has inked a subscription agreement to acquire 46,551,731 common shares of Midas Gold Corp., for gross proceeds of roughly $38.1 million in a non-brokered private placement. The company expects the deal to close on or about May 15, following which, it will own roughly 19.9% of the outstanding common shares of Midas Gold, on a non-diluted basis.
According to Barrick Gold, Midas Gold’s Stibnite Gold project in Idaho has low geopolitical risk. It also has the potential to produce more than 300,000 ounces of gold per annum at competitive operating costs and exploration upside.
Barrick Gold and Midas Gold will enter into an investor rights agreement on deal closure, subject to which, as long as Barrick Gold maintains a minimum of 10% ownership in Midas Gold, the agreement will grant the former the right to appoint one director to the latter’s board, a right to partake in future Midas Gold equity issuances, certain top-up rights with regards to outstanding convertible notes of Midas gold and right to first refusal of gold concentrates.
Midas Gold will increase the number of directors on its board to eight from seven. It will appoint an independent director to fill the position.
Notably, Barrick Gold is acquiring the shares for investment purposes. Subject to market conditions and other factors, the company may acquire additional ordinary shares or other securities of Midas Gold or dispose of some or all of the common shares or other securities of Midas Gold that it owns.
Barrick Gold’s shares have inched up 0.4% in the past three months, underperforming the 2.4% gain recorded by its
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