World's largest gold miner

Photo: CTV

Toronto-based Barrick Gold Corp. has agreed to buy Randgold Resources for $7.9 billion in stock to create the world's largest gold miner.

Investors will receive 6.128 new Barrick shares for each Randgold share they hold. Shareholders in Barrick will own about 66.6 per cent of the merged company, which will combine Randgold's African mines with Barrick's holdings in the Americas.

"The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry, bringing together the world's largest collection of Tier One gold assets, with a proven management team," John Thornton, Barrick's executive chairman, said in a statement Monday.

"There are no premiums in the merger because we strongly believe in the opportunity to add significant value for our shareholders from the disciplined management of our combined asset base and a focus on truly profitable growth."

The deal is subject to approval by the shareholders of both companies, regulatory approvals and other customary closing conditions.

Two-thirds of the directors of the combined company will be nominated by Barrick while one-third will be nominated by Randgold.

Thornton will be executive chairman, while Randgold chief executive Mark Bristow will be president and chief executive.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said the deal marks a return to Africa for Barrick, which spun off its holdings there eight years ago.

Barrick's more stable North American assets will reduce Randgold investors' exposure to risky African markets.

Hyett said that's also welcome since Randgold had been struggling to find new projects of scale.