Barrick’s Munk Says Newmont Deal More Important Now Than Ever

Apr 23, 2014 9:59 pm ET

April 23 (Bloomberg) -- Barrick Gold Corp.’s retiring Chairman, Peter Munk, who founded the world’s biggest miner of the precious metal, sees more reason for a takeover of rival Newmont Mining Inc. after prices slumped last year.

“For the first time in the last decade and a half, gold prices are heading down and not up,” Munk said today in an interview on Bloomberg TV. “Synergies become, percentage-wise, much more relevant than they were when gold prices were 50 percent higher.”

Gold’s 28 percent slump last year and rising mining costs have eroded Barrick’s margins, raised concerns about its debt and spurred the company to start selling higher-cost mines. Barrick, based in Toronto, and Newmont, based in Greenwood Village, Colorado, operate in five continents and have a combined market value of about $33 billion.

Before merger talks broke off April 18, the companies had agreed to an all-stock merger in which Barrick was to offer Newmont shareholders a premium of 13 percent over Newmont’s average share price in the previous 20 trading days, a person with knowledge of the situation said.

John Thornton is set to succeed Munk, Barrick’s 86-year-old founder, as chairman at the annual shareholders meeting next week.