Shine is Off Barrick Gold-Newmont Mining Tie-up

NEW YORK (The Deal) -- Merger talks between Barrick Gold (ABX) and Newmont Mining (NEM) have reportedly broken down but could be revived, as the world's two largest gold producers continue their on-again, off-again courtship.

Toronto-based Barrick and Newmont, of Greenwood Village, Colo., according to reports, had agreed on terms of their all-stock agreement that would create a miner with a combined market capitalization of more than $33 billion and have agreements in place covering combined management plans and how to extract costs from the combination.

But the two companies, which have held talks in the early 1990s and more recently in 2008 and 2010, were unable to agree on what mines to spin off post-deal, according to a report. The companies walked away from the table after a self-imposed deadline came and passed without agreement on what of the combination would be divested in Australia and New Zealand.

The spinoff question is no small one, as Barrick CEO Jamie Sokalsky, according to reports, was tapped to run the company formed by assets to be shed. But with the finish line so close, analysts covering the two stocks said Monday there was still a chance talks could heat up again, especially ahead of Barrick founder and chairman Peter Munk's planned April 30 retirement.

The companies had no comment Monday morning.

The discussions follow a substantial retreat in the price of gold, which lost about 28% of its value in 2013. A merger between Barrick and Newmont would create a company with global operations while also creating opportunities for upward of $1 billion in annual cost cuts, including a streamlining of the two companies' massive operations in Nevada.

The companies have a joint venture in Nevada and have operations close to each other in South America and Australia.

Barrick has struggled in recent years, pressured by both the drop in the price of gold and a 25% cut in its estimated gold reserve. The company also faces political issues with its Indonesian operation and operational issues at its sprawling Pascua Lama mine on the border of Chile and Argentina.

Newmont and Barrick aren't the only gold companies looking to do deals. A combined bid from Yamana Gold (AUY) and Agnico-Eagle Mines (AEM) last week was proffered to acquire Osisko Mining Corp. for $3.5 billion, countering a hostile bid by Goldcorp (GG).

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