September 25, 2018 | Materials | Europe | Ended

Randgold Resources / Barrick Gold: Regulatory and Political Considerations; Nil-Premium Opportunities

The nil-premium combination of Barrick Gold and Randgold Resources will create the largest gold producer in the world. The parties have disclosed limited regulatory hurdles, with the only antitrust clearance required from South Africa, where the parties use the same refining facilities. Political risks attached to the geographical location of Randgold assets are standard for mining industry investors and the appointment of Mark Bristow as CEO (currently Randgold’s CEO) may mitigate concerns that Barrick shareholders face in relation to its 64% stake in the Tanzania-focused Acacia Mining. In this report, we analyse antitrust issues in South Africa and the sensitivities in other key regions: Mali, Côte d’Ivoire, the Democratic Republic of the Congo and Tanzania. We also explore valuation considerations, including the scope for a bump for Randgold, or a counterbid for Barrick, and assess risk arbitrage trading opportunities.

Contents 1. African Mining Assets and the Competition Commission of South Africa 2. Politics and Sensitivities in Mali, Congo and Tanzania 3. Valuation and Possible Outcomes: Randgold Bump, Counterbid for Barrick 4. Risk Arbitrage Trading Thoughts Appendix A. Deal Structure (10 pages)

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