Kinross Gold Buys Nevada Assets from Barrick Gold for $610 Million

Kinross Gold (TSX:K,NYSE:KGC) has agreed to purchase the Bald Mountain gold mine, including an associated land package and 50 percent of the Round Mountain mine, from Barrick Gold (TSX:ABX,NYSE:ABX) for $610 million in cash.
Barrick will also receive a 2-percent net smelter royalty on future gold production from the Bald Mountain land package following the production of 10 million ounces from the property, and both companies will form a 50/50 joint venture to further explore the land package at Bald Mountain.
Shares of Barrick were up 2.69 percent during morning trading hours on the TSX on Thursday. About 3.67 million shares of Barrick traded hands vs. the daily average of approximately 2.36 million. The company saw a similar spike (1.99 percent) in New York, with trading volumes coming in at over twice the daily average.

“This strategic transaction represents a rare opportunity to add quality, free cash flowing assets that build on our platform in Nevada, one of the world’s most attractive mining jurisdictions,” said Kinross President and CEO J. Paul Rollinson in a statement. “These assets will increase our production, and are expected to lower costs and add significant and well-defined mineral resource potential.”
The news is certainly positive for Barrick, which is aiming to reduce its debt by $3 billion in 2015. “The sale of these assets is consistent with our strategy to create long-term value for our shareholders by strengthening the balance sheet and further focusing our portfolio on core mines that will drive free cash flow growth,” said Barrick President Kelvin Dushnisky in Thursday’s release.
In addition to its transaction with Kinross, Barrick is also selling its Ruby Hill mine and its 70-percent interest in the Spring Valley project to subsidiaries of Waterton Precious Metals. That transaction will earn the company $110 million in cash, and is expected to close by the end of 2015. The transaction with Kinross is expected to close in January 2016.

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.