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Barrick Gold’s lunge for Newmont Mining has officially gone hostile, extremely so, with Newmont formally rejecting the Canadian company’s US$17.8-billion offer and blasting its executive chairman, John Thornton, for shabby performance. But this is not the end of the story – don’t count Barrick out just yet.

On Monday, as expected, Newmont, America’s biggest gold company, told Barrick to hit the road. Its all-share, nil-premium offer, revealed on Feb. 25, was a non-starter, Newmont said in its presentation, arguing that Newmont’s proposed US$10-billion takeover of Vancouver’s Goldcorp was less risky and would create ample value for shareholders.

Newmont and its CEO, Gary Goldberg, lashed out at both Mr. Thornton and Barrick CEO Mark Bristow, though it was Mr. Thornton, the former Goldman Sachs boss who replaced the late Peter Munk as Barrick chairman in 2014, who took the most criticism. Newmont gleefully noted that since Mr. Thornton’s arrival, Barrick’s share price has underperformed Newmont’s by US$12-billion. Since the end of 2013, Barrick’s total shareholder return (including reinvested dividends) was negative 22 per cent. Newmont’s total return was 65 per cent.

“John Thornton is still firmly in control of Barrick,” the defence presentation blared, implying that Mr. Thornton might deliver the kiss of death to shareholder returns if his dream of buying Newmont succeeds.

Mr. Bristow, the former CEO of Rangold, which was bought by Barrick last year, was painted as a hypocrite. Barrick has argued that Newmont shareholders would see much better returns if Newmont ditched the Goldcorp purchase and embraced Barrick. In making its pitch, Barrick said the “Goldcorp transaction significantly dilutes Newmont’s world class asset base and attractiveness.”

Oh really, said Newmont. Newmont helpfully released a May, 2017, e-mail sent by Mr. Bristow to Goldcorp chairman Ian Telfer, when it appears Randgold was wooing Goldcorp about a merger: “In Goldcorp you have assembled a strong portfolio of assets located in world class districts … a testament to company’s assets and potential.”

So Mr. Bristow, who apparently loved Goldcorp two years ago, now thinks Goldcorp is a dog?

Newmont’s attack made some good points and was terrific sport; it’s been a long time since Canada has seen a delightfully surly corporate slugfest. Still, it might not be enough to get Barrick to call it quits, for the company still has a lot going for it.

The first is Mr. Bristow himself, who is widely considered to be the top value creator in the gold business. A presentation made two years ago by Paulson & Co. at the Denver Gold Forum praised Randgold as the best performer in the industry, measured by shareholder return, between 2010 and 2017. Randgold was one of only three companies in positive territory. Unlike the others, Rangold avoided writedowns (Barrick was the writedown champion).

Mr. Bristow’s impressive track record will not be lost on Newmont’s shareholders, all the more so since Mr. Goldberg is leaving as CEO. Out with the good, in with the potentially better?

The second is the undeniable cost savings (also known as synergies) that would arise by combining the vast Nevada operations of Barrick and Newmont, where the companies have nearby mines and processing plants. Barrick puts the synergies at US$750-million a year for the first five years. While the figure may be optimistic, there is no doubt that Barrick and Newmont should have combined their Nevada operations a long time ago. Even Newmont thinks so. It has proposed a Nevada-only joint venture that would be 45-per-cent owned by Newmont (after its merger with Goldcorp) and 55-per-cent owned by Barrick.

Barrick has rejected the joint venture idea, insisting it wants all of Newmont, presumably because Mr. Bristow thinks other Newmont assets would be fine additions to Barrick’s rather tattered spread of African and Latin American operations. To be sure, ego is playing a role in his all-or-nothing approach. Together, Barrick and Newmont would be the unassailable leader in the gold industry, a liquidity wonder that would give him compelling bragging rights.

Newmont shareholders have a dilemma. If Barrick walks, Mr. Bristow walks with it, along with the delicious Nevada synergies. But will he cancel Barrick’s offer now that Newmont has rejected it? As it stands, the current proposal (2.57 Barrick shares for every Newmont share) is probably going nowhere. But offers can be modified. Improving the share-exchange ratio might do the trick, even if Mr. Bristow insists the number is fixed. The bluffers’ game has begun.

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