Newmont has sent Barrick a notice of default after finding evidence of alleged mismanagement at the Nevada Gold Mines joint venture, escalating tensions between the partners, reported Bloomberg.
Barrick allegedly diverted resources from the joint venture to benefit its wholly owned Fourmile project, Newmont stated in a filing to the U.S. Securities and Exchange Commission.
After informing Barrick of the alleged issue last month, Newmont sent Barrick the notice in early February, the filing said. Under the companies’ 2019 joint venture agreement, a partner accused of breaching the pact typically has 30 days to remedy the issue or begin corrective action. If a dispute isn’t resolved, it may be taken to court in Nevada.
“While we disagree with Newmont’s claims, we are limited by the terms of the joint venture agreement in what we can say,” Barrick President and Chief Executive Officer Mark Hill said in a statement to Bloomberg News. “We are committed to constructive engagement and to working together with Newmont to deliver shareholder value.”
Newmont’s actions may complicate Barrick’s plans to separate its North American assets and sell a 10–15% stake in the new company later this year. A spinoff would include its interest in Nevada Gold Mines – of which Barrick owns 61.5% and Newmont 38.5% – along with the Fourmile project and a mine in the Dominican Republic, another collaboration with Newmont.
Newmont wants Barrick to address what it sees as underperformance at the Nevada assets before going ahead with the IPO, Bloomberg News reported last week, citing people familiar with the matter. The miner has been critical of Barrick’s management after output declines and rising costs, the sources said.
In its 10-K filing to the SEC, Newmont said: “Although we continue to work with Barrick to improve the performance of NGM and will take appropriate steps to address this matter, any such disagreements could have a material adverse effect on our interest in NGM, the business of NGM or the portion of our growth strategy related to NGM.”
The assets of Nevada Gold Mines include 10 underground and 12 open-pit mines, two autoclave facilities, two roasting facilities, four oxide mills, a flotation plant and five heap leach facilities.
Source: Bloomberg