Barrick’s Bold -or Desperate- Move: Spinning Out its American Gold Assets

Barrick’s Latest Move: IPO the Crown Jewels—But at What Price?

Following Barrick's (NYSE: B) announcement that the board has authorized management to explore an initial public offering of its Tier 1 North American gold assets, let's take a closer look at what the spinout would look like. The proposed “NewCo” would combine Nevada Gold Mines, Pueblo Viejo, and the wholly-owned Fourmile discovery into what could become one of the world’s largest pure-play gold companies.

The timing is not accidental.  Barrick has been looking at options ever since it unceremoniously bid its CEO adieu--only days after he (finally) announced some good news after years of lackluster returns. Activist investor Elliott Management has also built a stake worth at least several hundred million dollars, putting it among Barrick’s top shareholders and increasing pressure for a breakup into more focused regional entities. 

Barrick under Bristow dreadfully under performed Gold and its peers by a wide mark over the last 5 years. (To be fair, $NEM also lagged after the Newcrest merger.)  It wasn't until the end of Q2 --and after Bristow was ousted--that it finally caught up.

Gold Miners (Finally) Performing

The largest gold miners (+2 Million oz./yr.) have been having a stellar year as Gold rallies to new highs.

As usual, the most levered companies, $AU & $GFI, have been the out-performers.

Barrick $GOLD still underperforming

#Gold and #goldstocks - Uptrend stopped

Gold and gold stocks - Uptrend stopped

Attached are the daily charts of  North American largest gold companies, Barrick Gold and Newmont Mining. Both broke yesterday on the downside from an uptrend which was in place since the middle of  January 2016. The MACD gave a signal of divergence since early March which requested extreme caution.

The gold chart (attachment 2) completed yesterday a Head&Shoulder formation with a neckline just under US$ 1,240 per ounce.

The good thing is that we were warned for the last 2-3 weeks with the divergence of the gold price and the MACD that something is wrong. Very seldom we get such a nice pre warning in advance and investors were able to take the necessary action.

We don't take serious the usual excuse it was all about  a strong dollar. As attachment 4 shows, the U.S. Dollar Index is still in a well defined box with no indication of a strong move on the upside or on the downside at the moment.

Happy Easter

Newmont plans to link dividend to gold prices

The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price.

Newmont plans to link dividend to gold prices

(Reuters) - Newmont Mining Corp (NEM.N), the world's second-largest gold producer, plans to link its quarterly dividend to the price of gold it realizes for the preceding quarter.
The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price. The current gold price of about $1,450 an ounce will mean Newmont's annual dividend would be $1.00.
"With our strong balance sheet and cash flow, we are positioned to fund profitable growth and to pay a new gold price-linked dividend," Chief Executive Richard O'Brien said in a regulatory filing before its investor day.
The first quarterly dividend under this policy is expected to be payable on June 29. The company paid a quarterly dividend of 15 cents per share on March 30.
Newmont continues to see 2011 attributable gold production of 5.1-5.3 million ounces.
Newmont shares closed at $56.45 on Wednesday on the New York Stock Exchange.
(Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)
Newmont plans to link dividend to gold prices | Reuters