Barrick's Planned Spinoff Faces Legal and Operational Hurdles

Barrick plans a major North American gold spinoff by 2026, but a dispute with partner Newmont and rising costs pose challenges, despite record 2025 cash flow.

Barrick Mining is navigating the most significant corporate overhaul in its recent history, a process now encountering a formidable legal challenge. The company's strategy to separate its North American gold assets into a new publicly traded entity, dubbed "NewCo," by the end of 2026 is under pressure. The success of this initiative hinges partly on resolving a dispute with an unlikely adversary: its own joint-venture partner, Newmont.

Financial Performance Provides a Strong Foundation

Amidst this strategic pivot, Barrick's financial health remains robust, largely buoyed by favorable gold prices. The fourth quarter of 2025 saw the miner generate an operating cash flow of $2.73 billion and a free cash flow of $1.62 billion, both representing record highs. For the full year 2025, approximately 50% of operating cash flow was converted to free cash flow, which surged by 194% year-over-year.

This strong cash generation supports a revised dividend policy, which now targets a payout of 50% of annualized free cash flow. This commitment signals management's focus on shareholder returns even during a period of corporate transformation.

The Rationale Behind the NewCo Separation

The central aim of the spinoff is to unlock value by creating two distinct investment profiles. NewCo is designed to house Barrick's stable, cash-generating mines in North America, separating them from its growth-oriented—but higher-risk—operations in Africa and Pakistan. The new entity would consolidate three key assets: Barrick's 61.5% stake in Nevada Gold Mines (NGM), its 60% interest in the Pueblo Viejo mine in the Dominican Republic, and its wholly-owned Fourmile project in Nevada.

Fourmile is considered the crown jewel of the portfolio. For the second consecutive year, its indicated gold resources doubled, now standing at 2.6 million ounces with an average grade of 17.59 grams per tonne. The drilling budget for the project is set to increase to $150-$160 million in 2026, up from $91 million the previous year. A preliminary economic assessment suggests a potential annual production range of 600,000 to 750,000 ounces. Market analysts have valued the entire North American asset package between $56 billion and $62 billion.

Mounting Costs and Production Forecast

However, the company is not immune to industry-wide cost inflation. All-in sustaining costs (AISC) rose by approximately 9% year-over-year in Q4 2025, reaching $1,581 per ounce. For 2026, Barrick forecasts AISC between $1,760 and $1,950 per ounce, based on a gold price assumption of $4,500 per ounce.

Gold production guidance for 2026 is set at 2.90 to 3.25 million ounces, slightly below the adjusted 2025 production of 3.03 million ounces. Management attributes this variance to planned maintenance activities and the ramp-up of the Goldrush mine in Nevada, which is expected to skew production more heavily toward the second half of the year.

The Newmont Dispute: A Critical Legal Obstacle

The most significant threat to the NewCo initial public offering (IPO) stems from Barrick's partnership with Newmont. In February 2026, Newmont filed a formal notice of default against Barrick, alleging "mismanagement" and the diversion of resources to benefit Barrick's Fourmile project at the expense of their shared NGM venture. More critically, Newmont contends that the IPO constitutes a "change of control" event. As a result, it is asserting its right of first refusal and other blocking rights over the NGM shares.

Newmont's refusal to grant consent could legally derail the public listing. Given that NGM represents the core asset of the proposed NewCo, its exclusion would fundamentally undermine the value proposition of the entire spinoff.

The coming months will determine whether Barrick can overcome these legal and operational challenges to meet its late-2026 target for the NewCo IPO, a outcome that will significantly influence the investment narrative for Barrick's shares.