Barrick (GOLD) Enters Agreement to Divest Rights to BFGC
Barrick Gold Corporation GOLD recently announced that its fully-owned subsidiaries and Bullfrog Gold Corp. (“BFGC”) have inked a definitive purchase agreement. Per the arrangement, Barrick will sell all of its permits, historical resources, mining claims, rights of way and water rights in the Bullfrog mine area to BFGC. The company expects the deal to close in fourth-quarter 2020.
Notably, the Mineral Lease and Option to Purchase Agreement between Barrick and a subsidiary of BFGC, dated Mar 23, 2015, has been terminated. As consideration, Barrick will receive 54,600,000 units of BFGC, whereby each unit comprises one share of common stock of BFGC along with one whole warrant. It entitles the holder to buy one share of capital stock in BFGC at an exercise price of 30 cents for four years from the date of closing. Post deal closure, Barrick will own around 19.9% of BFGC’s shares on a fully-diluted basis.
Further, BFGC will also grant to Barrick a 2% NSR royalty on all minerals produced from the claims. Barrick is purchasing the units of BFGC for investment purposes. Barrick stated that it may buy additional units or other securities or dispose of some or all of the units of BFGC that it owns depending on market conditions and other factors.
Barrick’s shares have surged 67.1% in the past year compared with the industry’s 56.8% rally.
For 2020, Barrick anticipates attributable gold production in the range of 4.6-5 million ounces. All-in sustaining costs (AISC) is expected in the range of $920-$970 per ounce. Cost of sales is expected in the range of $980-$1,030 per ounce.
The company continues to expect copper production in the range of 440-500 million pounds at AISC of $2.20-$2.50 per pound and cost of sales of $2.10-$2.40 per pound.
Zacks Rank & Key Picks
Barrick currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Brenntag AG BNTGY, Comstock Mining, Inc. LODE and Equinox Gold Corp. EQX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Brenntag has an expected earnings growth rate of 2.9% for 2020. The company’s shares have surged 35.3% in the past year.
Comstock Mining has an expected earnings growth rate of 370% for 2020. Its shares have returned 140.5% in the past year.
Equinox has an expected earnings growth rate of 137.9% for 2020. The company’s shares have gained 127.1% in the past year.
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