Barrick Gold and Randgold Resources announced Monday that the companies had agreed to the terms of a recommended share-for-share merger, a union that would create the largest gold mining company in the world.

If the merger is approved, the combined company — which will be referred to as the New Barrick Group — will control five of the top ten tier-one gold mining operations in the world and will be the only company to control more than one. The companies define a tier-one operation as a mine that has low costs and a long life.

The merger announcement states that New Barrick Group will focus on developing its tier-one and strategic assets, while selling off its non-core assets “in a disciplined manner.” The five tier-one assets mentioned in the announcement are the Cortez and Goldstrike mines in Nevada, Pueblo Viejo in the Dominican Republic, Kibali in the Democratic Republic of Congo, and Loulo-Gounkoto in Mali.

Pueblo Viejo, as one of Barrick’s tier-one operations, currently has an all-in sustaining cost of $590 to $620 per ounce. The mine started production in 2012 and is expected to have a 25 year life of mine. By comparison, Hemlo, Barrick’s sole Canadian mine, has an all-in sustaining cost of $975 to $1075 per ounce, and is expected to provide ore until 2019, with a potential extension to 2026.

As part of the merger, Randgold shareholders will receive 6.1280 shares of New Barrick Group for each Randgold share they own. Ownership of New Barrick Group will be split 66.6 per cent Barrick shareholders and 33.4 per cent Randgold shareholders. Randgold shareholders are also entitled to a dividend of two dollars per share, while Barrick shareholders will receive  up to $0.14 per share dividend.

Barrick has also agreed to pay Randgold a $300 million “break free payment” should certain circumstances occur, such as Barrick receiving a “competing proposal” — an offer that concerns more than 15 per cent of a company’s assets.

Under this new deal, it was determined that Barrick executive chairman John L. Thornton will remain as executive chairman of New Barrick Group. Mark Bristow, the current CEO of Randgold, will take on the role of president and CEO of New Barrick Group. Randgold finance director and CFO Graham Shuttleworth will become the new senior executive vice president and CFO, while Barrick strategic matters senior executive vice president Kevin Thomson will retain his role at New Barrick Group. Two-thirds of the new board of directors will be nominated by Barrick, and the remaining third will be chosen by Randgold.

“Barrick and Randgold are cut from a single cloth,” Thornton said in a conference call on Monday. “[Mark Bristow] has said Randgold was modelled on Barrick as it existed in its early years under the leadership of Peter Munk and Bob Smith. The very culture we at Barrick have spent the past four-and-a-half years attempting to recover. It is no accident then that I believe our two companies think and act in the same way.”

Thornton went on to praise Randgold’s “agility and swift-footedness,” while touting Barrick’s infrastructure, global reach, and deep relationships with China. In a press release Monday, Barrick also announced that Chinese gold company Shandong Gold will be purchasing $300 million worth of Barrick shares.

According to Bristow, the two companies have been in talks since 2015. In a press release, he stated that New Barrick Group will be employing a similar strategy to the one he used at Randgold but “on a larger scale.”

For Charles Gibson, an analyst at Edison Investment Research, the merger can be seen as a victory for Randgold and its CEO.

“Given that Randgold Resources was once described as, ‘Mark Bristow running around West Africa with a cheque book,’ the announcement of today’s nil premium merger between Randgold and Barrick to form the world’s largest gold miner in a little over twenty years from the former’s inception is a significant personal triumph for Randgold’s CEO and will leave a lot of other gold mining companies pondering ‘what if’,” Gibson said over email.

Gibson went on to praise Randgold’s “methodical approach of science and geology over the values of Goldman Sachs-style corporate capitalism.” Bristow has been a vocal critic of the short-term thinking that led many gold miners, Barrick included, to write down the value of their assets by enormous sums when the price of gold fell from record heights in the early 2010s.

“Despite its earlier rise to greatness, Barrick’s shares are approximately where Randgold’s were ten years ago, whereas Randgold’s are where Barrick’s were ten years ago,” Gibson wrote.

The merger is dependent on the approval of both sets of shareholders, and is expected to close by the first quarter of 2019.

Updated with information on Barrick's Hemlo and Pueblo Viejo mines.