Barrick Gold Says Newmont Board Decides To Terminate Merger Talks

(RTTNews) - Confirming media reports over the past week, Canadian gold producer Barrick Gold Corp. (ABX, ABX.TO) announced Monday that the board of directors of smaller peer Newmont Mining Corp. (NEM) have decided to terminate merger talks with it. Newmont's Board has determined that the interests of its shareholders will be best served by remaining independent.

The world's largest two gold mining companies were reportedly in advanced talks about a merger as they grapple with a sharp drop in the price of gold. Gold futures fell 28 percent in 2013, marking their biggest annual price drop since 1981.

However, the talks are said to have broken down over the past week. They were even close to announcing a deal last Tuesday.

A merger between the two companies would have created a company with a market value of more than $33 billion with mines in five continents. As of Friday, Barrick had a market capitalization of about $20.84 billion, while Newmont had a market capitalization of about $13.17 billion.

The two companies have neighboring operations in Nevada, the source of about 60 percent of Barrick's production, and operations in proximity in both Peru and Australia.

Both Canada-based Barrick and Greenwood Village, Colorado-based Newmont Mining have been selling non-core assets as they focus on lower-cost, more profitable mine. Newmont has generated close to $600 million from selling assets since mid-2013, while Barrick has done more than $1 billion in divestitures.

Barrick said in March that it intends to shed about a 13.5 percent stake that it held indirectly in African Barrick Gold plc (ABG.L) as it continues efforts to divest non-core operations and cut costs in order to pay down debt. African Barrick is the largest gold miner by production in Tanzania.

ABX closed Friday's regular trading session at $17.89, up $0.26 on a volume of 10.67 million shares, and NEM closed at $26.45, up $0.76 on a volume of 11.56 million shares.