Barrick Gold Reportedly Revisits First Quantum Takeover For Copper Mining Expansion – Barrick Gold (NYSE:GOLD), iShares Frontier and Select EM ETF (ARCA:FM)

Barrick Gold Corporation GOLD is revisiting the idea of a First Quantum Minerals FM takeover. The Canadian copper producer faced a significant setback, losing over 60% of its share price through 2023.

Bloomberg reported that Barrick’s CEO, Mark Bristow, initiated talks with major investors of First Quantum late last year, aiming to assess their support for a potential acquisition. As an industry veteran known for successfully navigating challenging mining projects, Bristow believes that Barrick could resolve the issues in Panama and effectively manage First Quantum’s African mines, unlocking significant synergies for the two companies.

First Quantum’s vulnerability became pronounced when Panama ordered the closure of the Cobre Panama mine due to widespread protests triggered by a new operating contract. The subsequent ruling by Panama’s Supreme Court invalidated the law governing the operating license, leading to the mine’s closure and a significant loss of jobs in that region. This critical development left First Quantum in a precarious position, prompting speculation about its future.

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Barrick, a giant in the gold mining industry, has been looking to expand its presence in copper. The company is working on an expansion of a Lumwana mine in Zambia and the development of the Reko Diq copper/gold project in Pakistan, worth over $7 billion.

Still, a successful deal with First Quantum would quickly position it as one of the world’s premier copper producers. Barrick’s Q3 2023 copper production attributed to 50,800 metric tons, while the Cobre Panama mine alone produced 112,734 metric tons in the same period.

The smaller Canadian miner’s market value has now dwindled to around $6 billion, providing an opportunity for Barrick, valued at approximately $31 billion, to make a strategic move.

In June 2023, Bloomberg reported First Quantum’s rejection of an informal takeover offer from Barrick, which adds an intriguing layer to the current situation. Despite facing significant challenges, First Quantum showed reluctance to enter substantive talks, possibly underestimating the severity of its operational issues and the potential impact on shareholder value.

The rejection, however, has not deterred Barrick’s interest, and the recent rumors suggest that Bristow and his team might be considering a formal offer. With First Quantum’s largest shareholders, including the Capital Group and China’s Jiangxi Copper Co., being approached by Barrick, the stage is set for a high-stakes corporate acquisition drama in the coming months.

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