Shares in smaller gold and precious metals producers were boosted Wednesday as the new-look behemoth Barrick Gold (NYSE:GOLD, TSX:ABX) officially began trading following its merger with Randgold Resources.
The $18.3 billion deal received final approval last month and from now on the New York Stock Exchange the group's ticker will be GOLD.
READ: Barrick Gold and Randgold Resources merge to create world's largest gold miner but questions still remain
In Toronto, the company is keeping its ABX symbol. Shares in Barrick were down 0.60% on the day at $18.32. In New York shares in the new entity were also down, 0.81% to $13.43 each.
In New York today, the traditional ringing of the opening bell on Wall Street was carried out by the miner's executive chairman, John Thornton, with President and CEO Mark Bristow.
At the open, the new Barrick had a market capitalization of more than $23.75 billion, with the largest reserves base among its senior gold peers.
It comes as gold has been having a good run of late and that trend look set to continue as stock markets suffer amid global economic and trade uncertainty and the precious metal is seen as a safe haven.
Today, it reached a six month high, up $8.33 an ounce at US$1,286.63 and the market now has US$1,300 in its sights.
Impact on the space
The deal could also spur on more M&A (merger and acquisition) activity within the mining sector in 2019, reckon analysts.
When news of the newest and largest gold miner was unveiled in September was announced, questions about what it meant for the industry were sparked.
Russ Mould, AJ Bell investment director, noted: "The fact that the pros are buying gold and the punters are selling it is interesting – and could suggest that Barrick and Randgold Resources are positioning themselves for an upturn in gold by getting leaner and meaner, even if skeptics of the deal will argue it is a defensive measure prompted by necessity and lean times for their main product."
The union creates a company, which owns five of the industry’s Top 10 Tier 1 gold assets (Cortez and Goldstrike in Nevada, USA (100%); Kibali in the Democratic Republic of Congo (45%); Loulo-Gounkoto in Mali (80%); and Pueblo Viejo in Dominican Republic (60%).
It also has two assets with the potential to become Tier One gold assets (Goldrush/Fourmile (100%) and Turquoise Ridge (75%), both in the USA).
The new Barrick Gold is likely to sell a number of its non-core assets to position it as the lowest cost western-based gold miner, reckons BMO Capital Markets analyst Andrew Kaip.
He reckons 13 mines from South America to Zambia, which account for 750,000 ounces of gold are likely to be sold and the largest potential deal would be Barrick’s Lumwana copper mine in Zambia, which could fetch as much as $1.3 billion.
It may also sell its 50% stake in Chile's Zaldivar mine and Randgold’s Tongon, Massawa and Morila assets, Kaip said last October.
A boost to small-cap miners
The completion of the merger appeared to help send smaller Toronto-listed gold producer shares upward.
Mandalay Resources Corp (TSE:MND) added 6.7% to $0.080. It produces gold among others from the Björkdal mine in Sweden and the Costerfield project in Australia.
Endeavour Mining Corp (TSE:EDV) added 1.6% to $22.70 each. The group operates five mines across Côte d’Ivoire (Agbaou and Ity), Burkina Faso (Houndé, Karma) and Mali (Tabakoto).
Great Panther Silver Corp ( CSE:GPR) (NYSEAMERICAN:GPL) shares nudged up 2.1% in Toronto to $0.99. The group mines precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato Mine Complex and the Topia Mine. The company is also advancing towards the restart of the Coricancha Mine in Peru.
Another producer, Gold Resource Corp (NYSE:GORO), saw shares add 2.7% on the day in New York to stand at $4.109.
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