Barrick reaches agreement to sell 90% interest in the Massawa Project for up to $430 million
All amounts expressed in U.S. dollars.
TORONTO, Dec. 10, 2019 (GLOBE NEWSWIRE) -- Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) today announced that it and its Senegalese joint venture partner have reached agreement to sell their aggregate 90% interest in the Massawa project in Senegal to Teranga Gold Corporation (“Teranga”) for total consideration of up to $430 million.
The consideration consists of an up-front payment of $380 million, comprised of 20,718,273 Teranga common shares with a value of $3.85 per share and an aggregate value of approximately $80 million (based on the same price per Teranga subscription receipt under the concurrent equity offering announced by Teranga), and a cash payment of approximately $300 million, plus 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 will receive 92.5% of the total purchase price for its interest in the Massawa project, with the balance to be received by Barrick’s local Senegalese partner for its minority interest. On a pro forma basis, Barrick will hold 19,164,403 Teranga common shares, representing approximately 11.45% of Teranga’s issued and outstanding common shares on closing (calculated on a non-diluted basis).
Barrick is providing $25 million of the $225 million syndicated debt financing secured by Teranga in connection with the transaction.
Under the terms of an investor agreement to be entered into on closing of the transaction, Barrick will have the right to nominate one Teranga director for as long as it retains at least a 10% equity interest in Teranga, and will also be entitled to customary anti-dilution and piggyback registration rights. Barrick has also agreed to a 24-month standstill pursuant to which Barrick will not increase its share position in Teranga for 18 months, and thereafter may increase its position by an additional 5% over the ensuing six-month period. The standstill expires after 24 months.