Toronto,
CANADA
In line with its strategy of focusing on Tier One assets, Barrick Gold
Corporation has completed the recently announced transaction of combining its
Massawa gold project in Senegal with Teranga Gold Corporation’s Sabodala gold
mine.
The
gold giant company and its Senegalese partner held a 90% interest in the
Massawa project.
Massawa,
one of the highest-grade undeveloped open-pit gold reserves in West Africa, is
located only 20 km away from Teranga’s flagship Sabodala mine.As
part of the transaction Barrick and its partner will receive an up-front
payment valued at $380 million at the time of announcement, comprised of
20,718,273 Teranga common shares (with a value of $3.85 per share).
According
to the information made available to press, a cash payment of
approximately $300 million, and a contingent payment of up to $50 million which
is based upon the average gold price for the three-year period immediately
following closing (“three year average gold price”).
The
contingent payment, which is payable three years following closing, is $25
million if the three year average gold price is greater than $1,450 and less
than $1,500 per ounce; $35 million if the three year average gold price is
greater than $1,500 and less than $1,600 per ounce; and $50 million if the
three year average gold price exceeds $1,600 per ounce.
Barrick
President and Chief Executive, Mark Bristow said that Massawa was one of the
largest unexploited gold deposits in West Africa and its legacy company
Randgold Resources had developed this over a period of years to the point where
its value could now be optimally realized for the benefit of all its
stakeholders which includes the Senegal Government.
“Teranga
is best placed to achieve this as it already owns the nearby Sabodala mine and
Sabodala’s combination with Massawa is expected to deliver significant
synergies." Bristow said, adding that Barrick will participate in the
upside of the combined asset through the 11% interest it is acquiring in
Teranga through this transaction,” he said.
Teranga,
which kicked off operations at its $240 million Wahgnion mine in southern
Burkina Faso this year, expects to produce between 300,000-350,000 ounces in
2020 and generate more than $100 million of free cash flow at a $1,250 gold
price.
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