Barrick (GOLD) Completes Massawa Gold Project Transaction
Zacks Investment Research | Mar 04, 2020 09:58PM ET
Barrick Gold Corporation (NYSE:GOLD) completed the transaction of combining its Massawa gold project in Senegal with Sabodala gold mine of Teranga Gold Corporation, in sync with its goals to concentrate on Tier One assets.
Notably, Barrick and its Senegalese partner held a 90% stake in the Massawa project.
As part of the deal, Barrick and its partner will receive an up-front payment of $380 million at the time of announcement (comprising 20,718,273 common shares of Teranga) and a cash payment of around $300 million.
Moreover, it will also receive a contingent payment of up to $50 million. The contingent payment is based upon the average gold price for the immediate three-year period, following closing. It is anticipated to be $25 million if the average gold price for the three years is more than $1,450 per ounce and less than $1,500; $35 million if the three-year average gold price is more than $1,500 per ounce and less than $1,600; and $50 million if the three-year average gold price surpasses $1,600 per ounce.
Per management, Teranga already owns the nearby Sabodala mine, and the combination of Sabodala with Massawa will generate substantial synergies. Notably, Barrick will take part in the upside of the combined asset on account of the 11% stake it acquires in Teranga through the deal.
Barrick’s shares have gained 65.7% in the past year compared with the Zacks Investment Research
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