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Barrick forms strategic alliance with Reunion Gold

Published by , Assistant Editor
Global Mining Review,

Barrick Gold Corporation (Barrick) announced yesterday that it has entered into a Strategic Alliance Agreement (SAA) with Reunion Gold Corporation (Reunion) to form a 50-50 alliance to jointly explore for, develop and mine certain mineral projects in the Guiana Shield, including Guyana, Suriname, French Guiana and the North and Northeast Regions of Brazil (the Subject Area).

Reunion will initially contribute to the Alliance the Waiamu, Aremu, Arawini and Oko Projects, all located in Guyana. Barrick will initially fund an amount equal to CAN$4.2 million on these projects, as credit for historical exploration expenditures by Reunion, with subsequent funding to be on a 50:50 basis between Reunion and Barrick.

As long as the Alliance remains in effect, if Reunion acquires an interest or an option to acquire an interest in any mineral property in the Subject Area, Barrick will have 90 days to elect to include the new project in the Alliance. Barrick can nominate an Alliance project as a Designated Project, and has the right to earn a 70% interest by sole funding and completing a feasibility study for the project.

“The SAA expands Barrick’s exploration footprint in the Guiana Shield, a significantly underexplored region and one of the most prospective in the world for large scale gold discoveries. The Alliance will seek to identify and acquire properties that have the potential to yield discoveries consistent with Barrick’s definition of Tier 1 mines, leveraging Reunion’s capabilities and proven track record in the region, combined with Barrick’s experience at advancing and developing world-class assets,” says Barrick president and CEO Mark Bristow.

Concurrent with the formation of the SAA, Barrick has amended and restated its subscription agreement with Reunion dated 13 December 2018 in connection with a private placement offering by Reunion of up to CAN$15 million. Pursuant to the Amended and Restated Subscription Agreement, Barrick has agreed to acquire up to 35 700 000 common shares of Reunion at a price of C$0.15 per share. The aggregate consideration to be paid by Barrick in the offering is up to C$5.355 million. The Reunion offering is expected to close on or about 6 February 2019, subject to certain conditions including receipt of TSX Venture acceptance of the private placement.

As a result of its additional investment, Barrick will own a total of up to 83.7 million Reunion shares, increasing its interest in Reunion from approximately 15.0% to approximately 19.9% of Reunion's issued and outstanding common shares, determined on a non-diluted basis after giving effect to the offering. In connection with the entering into of the Alliance, Barrick will exercise its right under the Investor Rights Agreement between Barrick and Reunion dated 1 December 2017 to nominate one director to Reunion's board of directors.

Under the terms of the Investor Rights Agreement entered into in connection with Barrick’s initial investment in Reunion on 1 December 2017, so long as Barrick holds more than 10% of the then issued and outstanding shares of Reunion, Barrick will, among other things, have the right to participate in future equity financings by Reunion to maintain its proportionate interest at the time of such financing and will have the right to assign one or more geologists to work full time on any or all of Reunion’s mineral projects.


Barrick and Reunion have amended the terms of the Investor Rights Agreement so that Barrick's right of first refusal in connection with the sale by Reunion of any interest in any of Reunion’s mineral projects is now limited to a right of first refusal in connection with the sale by Reunion of the projects subject to the Alliance as well as the Dorlin, Haute Mana and Boulanger projects. Barrick may exercise its right of first refusal regardless of its ownership interest in Reunion's common shares.

An early warning report will be filed by Barrick in accordance with applicable securities laws.

Reunion is an exploration and development company focused on acquiring, exploring and developing gold projects in the highly prospective Guiana Shield of South America. Barrick holds its Reunion common shares for investment purposes. Depending on market conditions and other factors, including Reunion’s business and financial condition, Barrick may, subject to the Investor Rights Agreement, acquire additional common shares or other securities of Reunion or dispose of some or all of the common shares or other securities of Reunion that it owns at such time.

Barrick is a senior gold mining company organised under the laws of the Province of British Columbia.

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