Purchase of Ontario Project From Barrick Sets Up New Mid-tier Gold Producer

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Hemlo Mining Corp. has acquired the prolific, past-producing Hemlo gold complex in northern Ontario from Barrick Mining Corp. (ABX:TSX; B:NYSE), a CA$56 billion (CA$56B) mining major, for a total consideration of up to US$1.09 billion. The deal closed on XXXX date.

"The acquisition of Hemlo establishes the foundation for the next leading mid-tier Canadian growth-focused gold producer," said Jason Kosec, incoming president and chief executive officer (CEO) of Hemlo Mining, according to a September 10 news release.

In conjunction, Hemlo Mining has uplisted to the TSX Venture Exchange (TSX.V) from the exchange's NEX board under the ticker XXX.

For the Hemlo project, Hemlo Mining is paying Barrick US$875 million in cash plus US$50 million worth of shares upfront. Also, starting in January 2027 and for five years, Hemlo Mining will pay the global mining, exploration, and development company up to US$165 million in cash payments contingent on mine production and the gold price.

Barrick, with operations and projects on five continents and in 18 countries, has been divesting its noncore assets recently, and Hemlo is the latest in a series of projects to go, after Donlin and Alturas. The company's goal is to be able to build value solely through its tier one gold and copper assets. With the Hemlo sale, Barrick generates capital to bolster its balance sheet and return capital to shareholders.

Jefferies Analyst Fahad Tariq wrote in a note that Barrick is selling the Hemlo project at an attractive valuation and that stock buybacks from the Hemlo proceeds are likely, reported The Globe and Mail's Niall McGee on Sept. 11. Tariq added that buybacks make sense given that Barrick is trading at a deep discount to peers.

According to McGee, a rumor is swirling that Barrick might make a rival bid for Teck Resources Ltd. (TECK:TSX; TECK:NYSE), the latter company looking to merge with Anglo American Plc (AAUK:OTCQX; AAL:LSE).

MarketGrader has a Buy rating on Barrick and a target price implying a 55% return from its September 30 post-trading share price, the market researcher wrote in a recent Corporate Report.

Acquisition Fully Funded

In an October 7 release, Hemlo Mining announced it had increased the size of a previously announced bought deal private placement of subscription receipts and successfully closed both the brokered offering and a concurrent non-brokered private placement of subscription receipts to pay for the purchase of the project. Investors included Jonathan Awde, cofounder and former CEO of Dakota Gold Corp. (DC:NYSE American); and Marin Katusa, founder of Katusa Research; and major banks led by Scotiabank.

Under the brokered offering, the company issued 339,268,500 subscription receipts at a price of CA$2.00 per receipt, generating gross proceeds of CA$678,537,000.

For the non-brokered offering, the company issued 38,725,330 subscription receipts with terms substantially similar to those of the brokered subscription receipts at a price of CA$2.00 / $1.441 per receipt, resulting in gross proceeds of CA$77,819,325.

Wheaton Precious Metals Corp. Gold Stream

Another source of financing for Hemlo Mining is a US$400 million gold stream to be acquired by Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE), detailed in a Wheaton news release. This company is an investment vehicle whose revenue mostly comes from byproduct precious metals production streams.

"Hemlo offers a unique opportunity to add immediate, accretive gold ounces from a politically stable jurisdiction, backed by a long history of production and a capable operating team," Wheaton's CEO Randy Smallwood said in the release. "We are proud to support [Hemlo Mining] in its acquisition of a mine that has long been considered a cornerstone of Canada's mining industry while also contributing to strategic M&A momentum across the sector."

The Hemlo stream is forecasted to generate about 20,000 ounces (20 Koz) of gold per annum over the 14-year life of mine (LOM), explained CIBC Analyst Cosmos Chiu in a September 11 research report. With this stream, the annual production of 1 Moz for Wheaton Precious Metals is within reach. Minus the upfront cash consideration for this stream, the company has about US$600 million in cash and about US$2.6 billion in total liquidity.

The Hemlo transaction "enhances Wheaton's exposure to Canada, and, in our view, should be viewed positively by investors," Chiu wrote.

Recently, Chiu maintained his Outperformer rating on WPM but raised his target price on it by 8%. The new target represents 16% upside from the company's end-of-day September 30 share price.

Experts Like the Deal

Katusa, an expert on the resource exploration sector and an investor, as said above, is bullish on the Hemlo deal. He expects Hemlo Mining management to decrease costs and increase production, in turn yielding higher economics and resulting in a large rerating of the company's share price, he wrote in the Private Placement Alert.

"We're getting this asset that is already fast-forwarded and [has] been derisked, permitted, and built. We know the geology. We know the metallurgy," he said in his interview with Kosec. "And it's at the same pricing as we did at Osisko Development Corp. (ODV:TSX.V), which was over a double about a year ago. And we don't have to take those risks."

Even if the spot gold price were to drop to US$2,000/oz, Katusa still is comfortable with Hemlo, he wrote.

"The whole gold market will sell off, but this mine will still produce gold and make money," he noted. "This IS a risk and anything can happen."

Katusa said he intended to invest a minimum of US$5 million in Hemlo Mining and visit the project after the acquisition closes.

Chen Lin, in the September 15 edition of What is Chen Buying? What is Chen Selling?, reminded readers that they had gotten free CARTh (the old ticker from Hemlo Mining Corp.'s name, Carcetti Capital, before the transaction) shares from their previous Cub Energy Inc. (KUB:TSX.V) investment. KUB paid out CA$0.03 per share, then did a 300:1 reverse split in December 2022 as part of a large corporate reorganization. At that time, it changed its name to Carcetti Capital Corp. and began trading under CARTh. Lin pointed out that he still owns shares of KUB and CARTh and urged his readers to find out if they do, too.

"If you held KUB before and didn't sell the free spinoff, you should own some CARTh for free," he added. "I am excited to see CARTh start trading again and see how much I can make out of it!"

Currently, trading of CARTh is temporarily suspended as of October 2, 2025, pending review of the acquisition, according to the Canadian Investment Regulatory Organization, a news release noted. The share price last was CA$0.82.

More Than 25 Moz Gold Since 1985

The Hemlo project, 35 kilometers east of the town of Marathon in Ontario, is on the traditional territories of the Biigtigong Nishnaabeg and Netmizaaggamig Nishnaabeg First Nations, explained Hemlo Mining. The Canadian mine has historically produced more than 25,000,000 ounces (25 Moz) of gold since 1985 from underground and open-pit operations.

As of December 31, 2024, Hemlo's Probable reserves are 41,200,000 tons (41.2 Mt) of 1.75 grams per ton (1.75 g/t) gold for 2.3 Moz of contained gold. The Measured and Indicated resource is 71.3 Mt of 1.58 g/t gold for 3.6 Moz of contained gold. The inferred resource is 9.8 Mt of 1.98 g/t gold for 624 Koz of contained gold.

The recent prefeasibility study of Hemlo, detailed in the Hemlo Mining release, outlines an operation producing 154 Koz per year at an all-in sustaining cost of US$1,541 per ounce (US$1,541/oz) over a 14-year LOM. At consensus gold prices, the project is estimated to generate a US$1.1B after-tax net present value (NPV) discounted at 5% and US$1.49B of LOM after-tax free cash flow.

"If you look at the NAV sensitivity to gold price table, when you're looking at US$3,500 gold, you're looking at a US$1.8 billion asset," Kosec told Katusa during a recent interview. "We see a tremendous amount of value to be unlocked. If gold pulls back to US$2,750, you're still looking at a billion-dollar NAV."

Gold Prices Setting All-Time Highs

Gold prices surged to a new all-time high, surpassing US$4,100 per ounce, as concerns over renewed trade tensions between the United States and China drove investors toward safe-haven assets and increased speculation on potential Federal Reserve interest rate cuts, enhancing gold's attractiveness, reported Ayushman Ojha for Investing.com on October 14.

By 8:11 a.m. EST, spot gold had risen by 0.5% to US$4,129.42 per ounce, after reaching a record peak of US$4,179.48 earlier in the session. Gold futures climbed by 0.3% to US$4,146.67 per ounce.

Ongoing concerns persist regarding the persistent trade conflict between the world's two largest economies. China has announced sanctions on five U.S.-linked subsidiaries of the South Korean shipbuilder Hanwha Ocean, and both Beijing and Washington plan to impose additional port fees on ocean shipping companies transporting goods ranging from children's toys to crude oil.

Last week, U.S. President Donald Trump threatened to impose 100% tariffs on Chinese imports in response to Beijing's restrictions on exports of critical minerals used in electronics and defense, although he later seemed to soften this stance.

After climbing nearly 50% this year, gold could soar by 150% as soon as 2028 if it maintains its current trajectory, wrote Jason Ma for Fortune on October 11.

In a note on Monday, seasoned market analyst Ed Yardeni, president of Yardeni Research, reviewed his previous optimistic predictions for gold, which has consistently hit his targets ahead of time, Ma wrote. During that period, he highlighted gold's traditional role as a safeguard against inflation, the move by central banks to reduce reliance on the dollar after Russia's assets were frozen, the collapse of China's housing market, and Trump's trade war, along with his efforts to disrupt the global geopolitical landscape.

"We are now aiming for US$5,000 in 2026," Yardeni stated. "If it continues on its current path, it could reach US$10,000 before the end of the decade."

Based on gold's trajectory since late 2023, the price could hit the US$10,000-per-ounce mark sometime between mid-2028 and early 2029, the article noted.

Solid Leadership Team

Hemlo Mining's leadership is to consist of individuals with experience operating mining assets in Canada. To name a handful, Kosec, on tap to be its president and CEO and a director, has experience with both a merger with Integra Resources Corp. (ITR:TSX.V; IRRZF:OTCQB) as the founder and former president and CEO of Millennial Precious Metals Corp., and an acquisition in 2024, acting in the same role for the combined company.

Awde, the company's executive chairman, cofounded Dakota and Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE) (sold for CA$242 million in 2022). Robert Quartermain, to be a Hemlo Mining director,  is the former 25-year CEO of SSR Mining Inc. (SSRM:NASDAQ) and founder of Pretium Resources Inc., whose Brucejack mine was sold for US$2.8 billion in 2022. He played a key role in the discovery and delineation of Hemlo when working as a geologist for Teck. Dr. Raphael Dutaut, to be the company's vice president of exploration, previously worked in similar roles at Millennial Precious Metals and Integra.

"We are confident that (Hemlo Mining's) experienced management and the existing Hemlo team will be excellent stewards of the asset, unlock its future potential and continue to deliver benefits for all stakeholders," Mark Bristow, former CEO of Barrick, said in the company release.

According to Katusa, members of management participated in the recent financing. Awde, for example, invested US$6.5 million, and Kosec put in US$2 million, half of his net worth.

The Catalysts

Hemlo Mining will carry out the following three initiatives at the Hemlo project within the next 12 months, Katusa reported in a KRO Private Placement Alert, all of which should positively catalyze the company's stock price.

• The company will replace the expensive Australian contracted miners working at the project. These miners are using the mine's equipment rather than their own.
• Hemlo Mining will increase the economic gold cutoff to US$2,600, which in turn will boost the amount of ore going into the mill. Despite mill capacity of 10,000 tons per day (10 Ktpd), only 3.8 Ktpd are being fed into it.
• It will do US$10 million worth of exploration drilling, aiming to expand the resource and extend the life-of-mine (LOM).

"Our business objective is clear: to maximize the value of Hemlo's existing infrastructure through a fit-for-purpose operating approach, while unlocking new opportunities through an aggressive brownfields exploration strategy," Kosec said in the Hemlo Mining release.