Barrick Gold Royalty Spin-Off: Unlocking Shareholder Value through Financial Engineering
"Financial engineering" is a term, which has developed some pejorative connotations. It suggests a triumph of artifice over substance; salesmanship over value.
But what of a situation where a company consistently trades below its potential? A situation where the value appears self-evident on the basis of cash flow metrics but where factors -both macro and internal- ostensibly coalesce to ensure a perpetual discount?
We propose that Barrick Gold (ABX) be split into two companies:
- A royalty company (comprised of royalties strictly on Barrick's own operating mines)
- An operating company (essentially Barrick, but burdened by the royalties from the royalty company)
Existing shareholders would receive one share...
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