A Tale of Two Mining Companies

October 2018
By Joe Foster, Portfolio Manager and Strategist

On September 24, at the Denver Gold Forum in Colorado, USA, John Thornton, Chairman of Barrick, and Mark Bristow, CEO of Randgold, announced the merger of their companies. The proposed merger will be voted by shareholders in November.

Historically, whenever a senior gold company (Barrick) has taken over a smaller rival (Randgold), it has paid a premium, usually in the 20% to 50% range. Barrick-Randgold is the first major deal we know of in the gold sector without a premium.

Will Barrick prove to be too large and unwieldy? Or will a new industry leader emerge? It will probably take several years and a couple of setbacks, but we believe Messrs. Thornton and Bristow have the conviction, drive, assets, and people to make it work.

Performance of Rangold Resources vs. Gold Bullion vs. Barrick Gold

Source: VanEck, Bloomberg. Data as of 30 September 2018. Past performance is no guarantee of future results. Chart is for illustrative purposes only.

About the Author:

Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.


The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.


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