Barrick, Goldcorp team up as miners look to share risk

Bloomberg

Canada’s two biggest gold miners have formed a partnership to develop a gold-copper deposit in Chile as a third producer exits the project.
Vancouver-based Goldcorp Inc. agreed to buy 25 percent of the Cerro Casale in Chile’s Maricunga mineral belt from the world’s largest gold producer, Barrick Gold Corp., reducing the latter’s stake to 50 percent. Under terms of the deal announced in a statement Tuesday, Goldcorp will commit to spending $520 million, of which $260 million covers Barrick’s initial share. At the same time, Goldcorp will buy Kinross Gold Corp.’s 25 percent interest in Cerro Casale, making it an equal partner at the site with Barrick. Goldcorp is also buying 100 percent of Kinross’s interest in the Quebrada Seca exploration project adjacent to Cerro Casale and will give Barrick a royalty interest on gross revenues derived from both projects.
In a third deal, Goldcorp agreed to buy Exeter Resource Corp. in a share-swap arrangement that values Exeter at C$247 million ($184 million). Exeter’s main asset is the Caspiche project located about 10 kilometers (6.2 miles) north of Cerro Casale.
Miners are wading back into the deal pool following years of austerity that staunched investments in future production. Exploration budgets are rising and miners are looking to acquire assets through partnerships or outright purchases. Goldcorp Chief Executive Officer David Garofalo said in an interview in January that the miner’s future growth strategy will probably focus on partnerships with other senior miners as it looks for ways to share the burden of developing multibillion-dollar projects. Meanwhile, Barrick executives, including Executive Chairman John Thornton and President Kelvin Dushnisky, have said they would consider partnerships as a way of developing assets in Chile and elsewhere.
“This agreement will allow us to direct capital elsewhere in our portfolio, while ensuring shareholders retain exposure to the optionality associated with one of the largest undeveloped gold and copper deposits in the world,” Dushnisky said in the statement. Goldcorp has joint ventures with Barrick at the Pueblo Viejo mine in the Dominican Republic and with Vancouver-based Teck Resources Ltd. at the Nueva Union project in Chile. Last year Goldcorp bought Canadian explorer Kaminak Gold Corp. in a C$520 million share swap. Goldcorp rose 1.2 percent to close at C$21.45 on Monday in Toronto, increasing its gains this year to 17%.