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Barrick (GOLD) Completes Massawa Gold Project Transaction

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Barrick Gold Corporation GOLD completed the transaction of combining its Massawa gold project in Senegal with Sabodala gold mine of Teranga Gold Corporation, in sync with its goals to concentrate on Tier One assets.

Notably, Barrick and its Senegalese partner held a 90% stake in the Massawa project.

As part of the deal, Barrick and its partner will receive an up-front payment of $380 million at the time of announcement (comprising 20,718,273 common shares of Teranga) and a cash payment of around $300 million.

Moreover, it will also receive a contingent payment of up to $50 million. The contingent payment is based upon the average gold price for the immediate three-year period, following closing. It is anticipated to be $25 million if the average gold price for the three years is more than $1,450 per ounce and less than $1,500; $35 million if the three-year average gold price is more than $1,500 per ounce and less than $1,600; and $50 million if the three-year average gold price surpasses $1,600 per ounce.

Per management, Teranga already owns the nearby Sabodala mine, and the combination of Sabodala with Massawa will generate substantial synergies. Notably, Barrick will take part in the upside of the combined asset on account of the 11% stake it acquires in Teranga through the deal.

Barrick’s shares have gained 65.7% in the past year compared with the industry’s 42.8% rally.

 

 

On the fourth-quarter earnings call, the company anticipated attributable gold production of 4.8-5.2 million ounces at all-in sustaining costs (AISC) of $920-$970 per ounce for 2020. Cost of sales is expected to be $980-$1,030 per ounce.

The company expects copper production of 440-500 million pounds at AISC of $2.20-$2.50 per pound and at cost of sales of $2.10-$2.40 per pound.

Barrick Gold Corporation Price and Consensus

 

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, NovaGold Resources Inc. NG and Commercial Metals Company CMC.

Daqo New Energy has a projected earnings growth rate of 353.7% for 2020. The company’s shares have rallied 80.3% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold has a projected earnings growth rate of 11.1% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have surged 121.9% in a year.

Commercial Metals currently has a Zacks Rank #2 and a projected earnings growth rate of 21.6% for 2020. The company’s shares have rallied 17.6% in a year.

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