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They Had One of the Best Gold Discoveries on Earth. Then This Happened |Barrick - Newmont Deal

The Deep Dive Sep 4, 2026 16:04

Summary

Barrick handed Newmont 38.5% of Fourmile, a Nevada gold discovery, for $1.95B cash and two early-stage development properties, ending a default dispute.

Analysts pegged Newmont's 38.5% stake at $4-8B; Barrick defended a $4B total deal value but could not break down the math on its earnings call.

Barrick built its own trap by announcing a North American IPO before securing partner consent, then negotiating from weakness.

No 43-101 technical report exists for Fourmile — only a slide-deck PEA (Preliminary Economic Assessment) — letting analysts challenge Barrick's claim.

The cash flows to Barrick shareholders, not into the IPO vehicle, so the listed entity cedes its growth asset without funding.

Key points on Barrick Mining

  • Agreed to hand 38.5% of Four Mile — which Barrick itself once called 'the greatest gold discovery of the century' — to Newmont for $1.95B in cash plus two early-stage development properties, with no contingent payments even though Barrick has publicly said the resource is set to double with 20 rigs and 370 km of drilling planned through 2028.
  • Stock opened down as much as 9.7% in one of its worst sessions since March, with Bloomberg Intelligence flagging an implied ~$325 per resource ounce and Citi saying Newmont's 38.5% slice alone should have been worth $4-8B at investor consensus (vs. Scotia's $15B / 19% of Barrick's NAV for the full asset).
  • Has never filed a 43-101 technical report on Four Mile — the entire 2025 PEA (600-750k oz/yr for 25+ years at $1.5-1.7B capex and $650-750/oz AISC) exists only as a slide deck, which is exactly the disclosure gap that CIBC's Anita Sawney pinned the CEO to on the earnings call.
  • Bought certainty: the Newmont notice of default and JV litigation risk are gone, and Barrick's planned IPO of its North American gold assets is unblocked, targeted for completion by end of 2026 with a primary NYSE listing and secondary TSX listing at a 10% float.
  • The bulk of the $1.95B cash goes back to Barrick parent shareholders as buybacks and dividends rather than into the IPO vehicle, and the new listed entity will hold Four Mile at 61.5%, not the 100% Barrick originally planned to headline the IPO with.

Key points on Newmont

  • Picked up 38.5% of Barrick's Four Mile gold discovery for $1.95B in cash plus settlement of disputes — a stake Citi's investor-consensus math put at $4-8B (i.e. roughly half to a quarter of what analysts had expected Newmont to pay).
  • At gold of $4,360/oz and the PEA economics (~$835-935/oz AISC after royalties, per management's sensitivity on the call), Newmont's 38.5% slice works out to roughly $900M of annual operating margin, meaning the $1.95B check pays itself back in just over two years before running another 23 years of mine life (~6.5M attributable oz at ~$300 each).
  • Now formally consents to Barrick's planned IPO of North American gold assets, and all outstanding disputes under the Nevada Gold Mines JV agreement are settled, ending the notice of default Newmont issued in February 2026.
  • Also receives 38.5% of Barrick's Mike and Fiberline properties that Hill put at roughly 6.4M oz combined, though Barrick's CEO admitted on the call that he 'haven't put a lot of value towards' Mike and couldn't confirm the inferred vs. indicated split on the fly.
  • Closes out a hostile stretch in the JV: in January 2026 Newmont formally accused Barrick of diverting resources from Nevada Gold Mines into the wholly-owned Four Mile project, then issued the default notice eight days later — leverage that the host argues explains the discount on the agreed price.

Mark Hill's takeaways

  • Top takeaway As current Barrick CEO, he went off-script on the earnings call to argue the Newmont package is worth $4B, not $1.95B — adding the value of 38.5% of Newmont's Mike and Fiberline properties (~6.4M oz), dispute settlement, and the value of IPO consent itself — but then declined to break the $4B down when RBC's Josh Wolfson, Scotia's Tanya Jackiskanik, and UBS's Daniel Major all pressed for the math.
  • Conceded on the call that 'I haven't got a good answer' when CIBC's Anita Sawney pointed out that Barrick's lack of a 43-101 technical report on Four Mile is exactly why investors couldn't back out the implied value, effectively agreeing that the disclosure gap was driving the ~7% stock drop.
  • Frames the deal as buying certainty rather than as a strong negotiating outcome: the discount on Four Mile was, in his telling, a fee paid to Newmont to secure IPO consent and clear the default notice, not a price set by grade, mine life, or margin at $4,360 gold.
  • Expected to lead the new IPO vehicle targeted for end of 2026 (NYSE primary, TSX secondary), which will hold 61.5% of Nevada Gold Mines plus Pueblo Viejo in the Dominican Republic — assets that collectively produced roughly 2M attributable oz in 2025.
  • Earlier in the year, on the Q1 earnings call, he had tried to play down the dilution by saying Four Mile folding into the JV was 'an eventuality, not a maybe,' with the trigger not until fees were filed in 2029 — a timeline the Newmont deal has clearly pulled forward by several years.