Legal Dispute Threatens Barrick Gold's Planned Spinoff

Newmont accuses Barrick of contract breach in Nevada JV, creating a major hurdle for Barrick's planned North American gold assets spinoff and IPO by 2026.

A brewing legal conflict between mining giants Barrick Gold and Newmont is casting a shadow over Barrick's strategic corporate restructuring plans. Newmont has formally accused its joint venture partner of contract violations, a move that could potentially derail a significant initial public offering.

Contract Breach Allegations Emerge

The dispute centers on the Nevada Gold Mines (NGM) joint venture, which is 61.5% owned by Barrick and 38.5% by Newmont. In a filing with the U.S. Securities and Exchange Commission (SEC) on February 20, Newmont disclosed it had served Barrick with a formal notice of breach of contract on February 3. The allegation is that Barrick improperly diverted resources from the NGM operations to its wholly-owned Fourmile project.

According to the filing, Newmont had initially raised these concerns with both Barrick and the NGM management board on January 26, invoking its audit rights under the 2019 joint venture agreement. Barrick now has a 30-day period to remedy the situation or initiate corrective actions. Failure to do so could result in a lawsuit being filed in a Nevada court.

Barrick CEO Mark Hill has publicly denied the allegations. He stated, however, that contractual obligations prevent him from discussing the details publicly, emphasizing the company's commitment to a "constructive dialogue" with Newmont.

Spinoff Ambitions Face Hurdle

The timing of this conflict is particularly sensitive. In early February, Barrick announced its intention to consolidate its North American gold assets—including its 61.5% stake in NGM, the Pueblo Viejo mine in the Dominican Republic, and the Fourmile project—into a new entity. The company aims to take this new company public by the end of 2026.

Newmont's contractual rights present a major obstacle to this plan. The company holds a right of first refusal on any transactions involving the joint venture and has stated that its consent is required for the proposed IPO. Newmont has also previously signaled interest in acquiring Barrick's Nevada assets directly.

Newmont CEO Natascha Viljoen clarified the company's position on February 20, stating that the operational performance of NGM must be improved before any spinoff is considered. She noted that the mine's performance has declined over the past six years.

Operational Challenges Compound Pressure

The legal threat comes during a period of operational headwinds for Barrick. The company reported its sixth consecutive annual decline in gold production in 2025, hitting its lowest output level in at least 25 years. For 2026, Barrick is targeting production of 2.90 to 3.25 million ounces, a range similar to the previous year's performance.

Market reaction to the dispute was evident in recent trading. On Friday, shares of both companies declined: Newmont fell by 2.7%, while Barrick dropped 1.8%. Barrick stock closed at $47.96 on the New York Stock Exchange. Notably, the gold price traded near $5,109 per ounce over the weekend, significantly above the $4,500 assumption Barrick uses for its cost forecasting.

Stakes Are High as Deadline Looms

The deadline to address the alleged contract breach falls in early March. Analysts at RBC Capital Markets estimate that the NGM joint venture constitutes approximately 60% of Barrick's total market value.

The path forward is fraught with risk. If the two mining leaders cannot reach an agreement, protracted litigation appears likely. Such a legal battle could significantly delay, or even completely block, Barrick's planned IPO. With the NGM partnership representing a substantial portion of Barrick's worth, considerable value is on the line for both corporations and their shareholders.