Barrick Gold’s Informal Takeover Attempt Rejected by First Quantum Minerals

First Quantum Minerals (TSE: FM) recently turned down an informal takeover proposal from Barrick Gold (NYSE: GOLD TSE: ABX), the world’s second-largest producer of precious metals.

As mining companies search for growth opportunities, Barrick approached First Quantum in its quest to expand its presence in the copper market. However, First Quantum expressed its lack of interest in a merger and declined to engage in substantive discussions. Sources familiar with the matter revealed these details.

Following the news, shares of First Quantum surged by as much as 12% during Canadian trading, marking the largest intraday gain since November. At 11:09 a.m. on Thursday June 16th in Toronto, the company’s shares were up 9.5%, bringing its market valuation to $17.7 billion. On the other hand, Barrick’s shares declined by 2.1% in New York trading, resulting in a market value of $28.8 billion.

According to the sources, Barrick and First Quantum are currently not engaged in formal negotiations. It remains uncertain whether Barrick will revive its interest in the future.

Representatives for both Barrick and First Quantum declined to comment on the matter.

Barrick’s CEO, Mark Bristow, assumed the position following the acquisition of his founded company, Randgold Resources Ltd., by Barrick in a zero-premium deal completed in 2019. Bristow has emphasized the importance of creating value through deals rather than solely pursuing size, downplaying the need for significant premiums.

In the past, Bristow pursued Newmont Corp. with a hostile all-share no-premium bid, which ultimately failed. Conversely, recent acquisitions in the copper sector have involved substantial premiums. BHP Group Ltd. offered a 49% premium to OZ Minerals Ltd.’s undisturbed share price in a $6.6 billion deal, while Rio Tinto Group acquired Turquoise Hill Resources Ltd.’s minority shareholders at a 67% premium.

If a deal were to materialize between Barrick and First Quantum, it would position Barrick as a significant player in the copper mining industry at a time when major industry players are actively seeking to expand copper production. Companies like BHP, Rio Tinto, and Glencore are also pursuing growth opportunities in the copper sector through acquisitions.

Barrick’s pursuit of First Quantum aligns with the broader trend of increased deal-making activities among major mining companies worldwide, particularly focusing on metals like copper and lithium, which play a crucial role in the decarbonization of the global economy.

While Barrick seeks to bolster its copper portfolio, it faces challenges as its gold output reaches its lowest level since 2000. The company has implemented a strategy to reduce debt and divest assets, which has impacted its gold production. Meanwhile, its rival Newmont is poised to solidify its position as the largest gold producer through a deal with Newcrest Mining Ltd., leaving Barrick with limited opportunities to catch up.

Bristow has stressed the importance of gold companies entering the copper market for growth. He believes that copper output is essential for mining companies to remain relevant. Last year, Barrick launched a $7 billion copper project in Pakistan, aiming for it to become operational by 2028.

First Quantum Minerals, based in Canada, has long been considered an attractive target for acquisition in the mining industry, primarily due to its substantial copper mine in Panama.

The mine, which contributes around 1.5% of global copper production, recently resolved a dispute with the Panamanian government after several months.

Additionally, First Quantum owns mines in Africa, Australia, Europe, and the Middle East that produce copper, gold, and nickel.