“Transfer” the best quality assets to new investors? Barrick Gold (B.US) plans to split its core gold mine and go public, shareholders are angry at diluting equity

The Zhitong Finance App learned that Barrick Gold (B.US) is facing increasingly strong opposition from major shareholders due to its Chairman John Thornton (John Thornton)'s plan to split and list some of its high-quality North American gold assets. This trend has already sparked collective discontent among institutional investors.

Under the proposed initial public offering (IPO) plan, Barrick will package and list the Nevada business, the Fourmile gold project, and a mine in the Dominican Republic. Barrick will retain a majority stake and sell only a few shares to the public.

However, portfolio managers at asset management institutions such as Van Eck Associates, Mackenzie Financial, and Franklin Equity Group have clearly expressed opposition to this strategy. Some people believe that existing shareholders will actually be forced to relinquish part of the income rights on the company's best quality assets and hand them over to new investors.

The controversy is expected to heat up again when Barrick releases quarterly results on Monday.

Investors question the logic of the spin-off

Barrick argued that listing North American assets independently would allow the market to give them a higher valuation without being dragged down by other problematic assets in its portfolio.

The Nevada business is particularly critical. The business is part of the world's largest gold mining area and has contributed more than half of Barrick's profits, although production has continued to decline in recent years.

Some investors believe there is no good reason to sell shares in these assets. The proposed deal could dilute existing shareholders' equity in the business by as much as 15%.

At the same time, the transaction structure itself also faces complications, because Barrick's Nevada mining site is operated in a joint venture with Newmont (Newmont), and Newmont has raised objections to Barrick's management of the joint venture and argues that the IPO may require its consent before proceeding.

For Barrick shareholders, the core dispute is whether the IPO can release higher valuations for high-quality mines, or simply give up future value-added space to new investors. The game was particularly critical for Barrick — the company never fully realized its dividends while gold prices continued to be at historically high levels. Its production is declining year by year, and its stock price performance lags behind its main competitors. The Nevada business is irreplaceable in supporting profits. A successful restructuring may demonstrate asset value, but spin-offs alone cannot fundamentally solve deep problems at the operational level.

Sandton is under pressure, and shareholders' dissatisfaction escalates

The controversy has also caused Sandton himself to face stricter scrutiny. Thornton has been Barrick's chairman since 2014.

During his tenure, Barrick's stock price performance has always been inferior to peers such as Newmont and Agnico Eagle, and fell to the third largest global gold producer last year. Former CEO Mark Bristow (Mark Bristow) was removed from office in September last year due to repeated failure to meet internal goals.

Some shareholders' dissatisfaction is now directed directly at Sandton. Mackenzie's portfolio manager Benoit Gervais publicly stated that it may be time to consider changing the chairman.

In the latest shareholder vote, Sandton received only an approval rating of 81.1%, which is significantly lower than the level of support from Newmont and Chairman Agnico Eagle.

However, Barrick's recent operating data provided some support. Gold production in the first quarter exceeded expectations. However, critics point out that restructuring the ownership structure of Nevada assets cannot solve old problems on the production side.

This placed additional pressure on the quarterly earnings report released on Monday. Investors will not only focus on gold production and financial data, but also look forward to seeing clear evidence that Barrick can actually improve the operation of high-quality mining areas in North America before requiring shareholders to relinquish part of their shares.