barrick denies rumours

TORONTO (Reuters) - Barrick Gold Corp., the world's biggest gold producer, shot down a recent report in BusinessWeek magazine on Friday that suggested it may make a bid for Newmont Mining Corp.

"It's just another tidbit of idle speculation," said Vince Borg, a spokesman for Barrick. "Unsubstantiated, no sources."

The report, citing "some pros," said Barrick would go after Newmont, the world's No. 2 gold producer, for its proven and probable reserves of about 95 million ounces of gold.

"Newmont doesn't comment on rumors or speculation about what others companies may or may not do," said Omar Jabara, a spokesman with Newmont.

A deal between the two companies, according to the March 26 edition of BusinessWeek, would likely value Newmont stock in the mid-$50 range. The suggestion comes from Brookhaven Capital Management, which has loaded up on shares of Newmont.

Barrick shares were down 7 Canadian cents at C$32.96 at mid-afternoon on the Toronto Stock Exchange, while Newmont was up 95 cents, or 2 percent, at $43.09 in New York.

"Some guy who owns Newmont shares says Newmont's the stock to go to and he owns shares and then they cite pros," said Borg.

Frank Holmes, chief executive of U.S. Global Investors Inc. a $5 billion fund with mining holdings, said a Barrick-Newmont merger would only make sense if there were synergies that result in savings.

"The issue for miners, especially gold, is that grades are falling and production costs are going up.

"Either gold prices have to go up, or there have to be synergies through mergers," he said.

Holmes, speaking to Reuters from his office in San Antonio, Texas, noted that when Barrick acquired Canada's Placer Dome to become the world's biggest gold producer, it said the merger would result in $200 million in synergies.

"Barrick and Newmont have a lot of properties cheek by jowl in Nevada so if they merge they don't have to buy separate trucks, they don't need two geologists."

If they merged now, they would have some 60 projects around the world, which is a high number, but with cost savings, they could develop them with fewer people.