Barrick Gold Corporation (B) reached a settlement with Mali that ends a two-year dispute over the Loulo Gounkoto mine. The two sides agreed to a total payment of 244 billion CFA francs, about $430 million. First, Barrick will pay 144 billion CFA francs within 6 days. Then the firm will apply 50 billion CFA francs in VAT credit offsets. Last year, the firm paid another 50 billion CFA francs as part of the talks.
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As part of the deal, Barrick will regain full control of the Loulo Gounkoto site. The firm will also drop its arbitration claims. In return, Mali will drop its charges and will act to free four staff members who were held during the clash. The nation will also renew the Loulo mine permit for ten years.
As expected, B shares reacted positively to the news, rising by over 8% to close at $39.54.
What It Means for Output and Cash Flow
Next, the company plans to bring the site back to full use. Analysts at BMO Capital Markets said the mine could produce about 670,000 ounces next year if work restarts quickly. The group said this level of output could bring in about $1.5 billion in operating cash flow.
Finally, Mali said it expects about 90 billion CFA francs in yearly dividends from the mine. The nation also expects added income from royalties and its stake. The deal closes a tense period and gives both sides a clear route to steady output once again.
Is Barrick Gold Stock a Buy?
Barrick Gold enjoys the Street’s endorsement with a Strong Buy consensus rating. The average B stock price target stands at $42.59, implying a 7.71% upside from the current price.
