Tuesday 23 October 2018 4:31 pm | Updated: Tuesday 21 May 2019 4:21 pm

Barrick’s merger with Randgold could spark $5bn asset sales, BMO says

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Canadian miner Barrick Gold's merger with Randgold Resources could spark up to $5bn (£3.85bn) of asset sales, BMO Capital Markets said.

The merger, which will value the combined company at around $18bn (£13.86bn), could reinstate Barrick as the largest gold producer, however analysts said the company aims to become the lowest cost western-based gold producer.

The BMO Capital Markets note to investors said: “At face value, New Barrick is poised to regain the top position as the largest gold producer, a title it has long held but recently passed on to Newmont.

“We do not see this as the prime motivation of the merger – in fact it is almost certain that New Barrick will embark upon a new round of asset divestitures aimed at positioning the company as the lowest cost western-based gold producer, but not necessarily the largest.”

Barrick, which has suffered a dip in outfall, will own around two-thirds of the new company while Randgold, which has been hit by a strike at one of its biggest mines, will own around a third.

Randgold shares on the London Stock Exchange will be cancelled and New Barrick Group will be listed in Toronto and New York.

Announcing the deal last month the companies said: “The boards of Barrick and Randgold believe that the merger will create an industry-leading gold company with the greatest concentration of Tier One Gold Assets in the industry, the lowest total cash cost position among senior gold peers."