Barrick Continues to Expand with Bigger Stake in Midas Gold

Barrick Gold (TSX:ABX,NYSE:GOLD) is continuing its expansion plans by acquiring an additional 7,274,142 common shares of US junior miner Midas Gold (TSX:MAX,OTCQX:MDRPF), the company announced on Tuesday (June 11). 

At 46,551,731 common shares, Barrick currently owns 19.6 percent of Midas. This new purchase would have the gold miner owning approximately 19.9 percent of the junior company.

As per the agreement, Barrick will purchase the additional Midas common shares at an offering price of C$0.60 each, for a total cost of C$4.4 million.

Barrick is acquiring the additional common shares for investment purposes. The miner may purchase or sell further common shares or other securities of Midas Gold in the future.

On Monday (June 10), Midas said it is looking to expand its Stibnite gold project in Idaho. It hopes to raise C$19.9 million through a bought deal public offering of 33.2 million shares in order to make the progression a reality.

“The proceeds from the sale of the common shares will be used to advance the feasibility study on, and permitting for, the redevelopment and restoration of the Stibnite gold project, Idaho, and general working capital,” the company stated in a press release.

In addition to Barrick, Paulson & Co. will be participating in the offering as a way to maintain its current stake in the company. At this time, Paulson owns a larger portion of Midas than Barrick, holding a 29.11 percent interest in the company.

Stibnite is the fourth highest grade open pit in the US at 1.63 grams per tonne gold. It boasts an all-in sustaining cost of US$506 per ounce of gold for the first four years of operation, with that amount coming in at US$616 per ounce of gold for the asset’s full life. Stibnite’s deposits are open to expansion with multiple exploration prospects.

Barrick’s purchase is expected to close next week, on or about June 19 following regulatory approval.

As of 12:13 p.m. EDT on Tuesday, Barrick was up 1.57 percent, trading at C$18.12. Midas Gold was down 11.76 percent, trading at C$0.60.

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