WSJ: Merger Talks Between Barrick Gold, Newmont Mining Break Down

(RTTNews) - Barrick Gold Corp. (ABX, ABX.TO) and Newmont Mining Corp. (NEM), the world's largest gold mining companies, were in advanced talks about a merger as they grapple with a sharp drop in the price of gold, the Wall Street Journal reported Friday, citing people familiar with the matter. However, the talks reportedly broke down in the past few days.

According to the WSJ report, the two companies had planned to announce a deal as early as Tuesday. Although talks broke down, it could possibly be revived.

A merger between the two companies would have created a company with a market value of more than $30 billion with mines in five continents. As of Friday, Barrick had a market capitalization of about $21 billion, while Newmont had a market capitalization of about $12 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.

In February, Barrick reported a loss for the fourth quarter that narrowed from last year on fewer one-time charges, offsetting a decline in revenues amid lower gold production as well as lower prices. In addition, Barrick slashed its gold reserves by 26 percent. The company also projected lower copper and gold production as well as lower capital expenditure for 2014.

Meanwhile, Newmont Mining reported a loss for the fourth quarter of more than $1 billion on lower sales, compared to a profit in the year-ago period. Gold futures fell 28 percent in 2013, marking their biggest annual price drop since 1981.

Canadian gold miners Agnico Eagle Mines Ltd. (AEM, AEM.TO) and Yamana Gold, Inc. (AUY, YRI.TO) agreed last Wednesday to jointly acquire smaller peer Osisko Mining Corp. (OSK.TO) for C$8.15 per share in a cash and stock deal valued at about C$3.9 billion. Agnico Eagle and Yamana Gold will split Osisko, and share the coveted Canadian Malartic Mine in Québec.

ABX closed Friday's trading at $17.98, down $0.34 or 1.86 percent on a volume of 8.63 million shares. NEM closed Friday's trading at $23.54, down $0.21 or 0.88 percent on a volume of 5.47 million shares.