Newmont Challenges Joint Venture Partner Amid Strategic Shifts

A public dispute has emerged between mining giants Newmont and Barrick Gold concerning their shared Nevada Gold Mines operation. Newmont has voiced significant concerns over the asset's performance, citing a six-year trend of operational decline and diminishing value. The tension is amplified by Barrick's concurrent preparations for a potential initial public offering (IPO) involving its North American gold assets.

Newmont, which holds a 38.5% stake in the Nevada joint venture, publicly stated this week that the operation has suffered a "deterioration in performance" over the past half-decade. Barrick, as the operator, controls a 61.5% interest. The partnership, established in 2019, consolidates the Nevada activities of both corporations.

Recent operational data underscores the issue. According to a BNN Bloomberg report citing quarterly figures, gold production at Nevada Gold Mines fell by 23% during the fourth quarter. Martin Pradier, an analyst at Veritas, told the outlet that the outlook points to higher costs and lower production than previously communicated.

IPO Plans Introduce Complexity

Newmont's statement was reportedly prompted by investor inquiries and media coverage of Barrick's exploration of a public listing for a new entity housing its North American gold assets. These assets are said to include not only Nevada Gold Mines but also Pueblo Viejo and Fourmile.

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In its release, Newmont emphasized that "any transaction" impacting their joint ventures must respect contractual safeguards, explicitly noting provisions that restrict transfers. The company also holds a Right of First Refusal on the assets, a position that could provide substantial negotiating leverage in the context of a possible IPO.

Analyst Martin Pradier further suggested to BNN Bloomberg that Newmont might have a fundamental interest in acquiring Barrick's entire stake in the Nevada assets. An IPO would establish a market valuation, potentially facilitating such a move later.

Sector-Wide Cost Pressures and Share Price Movement

The disagreement unfolds against a backdrop of rising industry expenses. Barrick reported year-over-year increases of approximately 20% in gold production costs and around 10% for copper costs, as noted by BNN Bloomberg.

Newmont's share price has exhibited notable volatility. After closing at $115.32 last Friday with a daily gain of 6.26% (Yahoo Finance data), the stock traded at $123.69 yesterday (MarketWatch). This remains below its 52-week high of $134.88, reached in late January. Newmont stated it is taking "appropriate steps" to address its concerns with Barrick, aiming to reverse the joint venture's performance decline.