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Barrick, Shandong Ink Enhanced Strategic Cooperation Deal

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Barrick Gold Corporation (ABX - Free Report) has inked an enhanced strategic cooperation agreement with Shandong Gold Group Co., Ltd — one of the leading mining companies in China.

The deal builds on the previous agreement signed between the parties in April 2017, when Shandong Gold acquired 50% of Barrick’s Veladero mine. It will enable the companies to jointly explore opportunities and boost long-term value.

One of the key elements of the deal includes the evaluation of mining project at Lama, Argentina, which is currently under independent assessment by Shandong Gold. It includes a high-level evaluation of potential synergies between Veladero and Lama.

After the completion of the study, the companies may agree to undertake further appraisals and technical work for evaluating various development options, which include feasibility of using heap leach processing for low-grade and easy-to-leach gold ore, an open-pit mine construction at Lama and the viability of adopting environmental-friendly leaching reagents like low-cyanide. Notably, any investment decision taken by Shandong Gold regarding the project will be subject to additional agreement between the companies.

Moreover, the companies have expressed their intention to assess joint investments in organic mining projects that are presently owned by either. They have agreed to consider acquisition opportunities or potential asset sales, if such moves suit their interests and boost opportunity.  

The companies have also agreed to establish mechanisms to promote greater communication and knowledge-sharing between the respective technical and management teams. The engagement may cover engineering, mining, construction, finance, environmental and social management. The companies agreed to provide access to their respective service providers, supplier networks, investors and capital providers.

Barrick Gold’s shares have inched up 1.4% in the past three months compared with the industry’s rise of roughly 0.5%.

Zacks Rank & Stocks to Consider

Barrick Gold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Methanex Corporation (MEOH - Free Report) , FMC Corporation (FMC - Free Report) and LyondellBasell Industries N.V. (LYB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 67.5% in a year.

FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have gained 21.5% in a year.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have returned up 30.9% in a year.

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