African Barrick Gold eyes JSE listing

[] — African Barrick Gold (ABG) may list on the Johannesburg Stock Exchange (JSE) as it prepares to expand in Africa beyond its existing operations which are located wholly in Tanzania.

Interviewed on the sidelines of the Denver Gold Forum being held in Denver, Colorado ABG CEO Greg Hawkins told Miningmx, “a JSE listing is on the radar screen but our priority for the next year is to list ABG on the Dar es Salaam stock exchange in line with undertakings given to the Tanzanian government.’

ABG is currently listed only the London Stock Exchange. It operates four mines in Tanzania which produced 716 000oz of gold in 2009 at an average cash operating cost of $533/oz.

That makes ABG the fifth largest gold producer in Africa and the group controls reserves and resources totalling some 26 million ounces (m oz) of gold.

ABG was created in March this year when parent Canadian heavyweight Barrick Gold spun out its African gold mining operations separately through an initial public offering in London.

The group’s headquarters are in London but its operational hub is in Johannesburg where most of its top management are based.

Hawkins commented, “A JSE listing makes sense because our operational hub is in Johannesburg.

“We are an African mining company and Johannesburg is an excellent base from which to operate into Tanzania as well as the other parts of the continent we are now looking at in terms of possible expansions through mergers and acquisition (M&A).

“We have already had a couple of preliminary discussions with the JSE as well as with potential investors in South Africa.

“It seems there is keen interest from South African investors in our group but there are some issues surrounding how much institutions can invest in companies listed on the JSE which operate in Africa outside of South Africa. We understand there may be some changes coming on this.’

In his presentation to the Forum Hawkins said the current production base of just over 700 000oz/year provided a profitable platform from which ABG intended growing both organically and through M&A activity.

The initial target is to reach a production level of 1m oz/year of gold by 2014.

Hawkins said the decision to split ABG from parent Barrick Gold was beneficial for ABG’s growth prospects because of the closer focus it allowed on African projects.

He commented, “at ABG we are now trying to grow a business off a production base of, say, 750 000oz/year.

“That allows management to take a very different view on projects which could make an impact on the share price compared to when we were part of Barrick which was trying to grow off a 7.5m oz/year base.

“We were hindered previously to an extent because, while there were no financial issues with the projects we put forward to Barrick for approval, they were not viewed as being of the size and scale required to move the Barrick share price.

“But for ABG projects which can add 50,000oz/year through organic growth or 150 000oz/year through M&A activity will have a significant impact on our business.’

A lot of firepower

Hawkins told Miningmx that ABG’s focus looking for possible new projects outside of Tanzania so far was on West Africa and the Nubian Shield region which includes countries such as Eritrea.

ABG made attributable net profits of $66m in the year to end-December 2009 and followed that with attributable net profits of $99.2m for the six months to end-June during which an operational cash flow of $158m was generated.

Hawkins pointed out ABG had a net cash balance of $334m at end-June and no debt.

“We have a lot of firepower with which to fund our organic growth and look further afield in Africa,’ he commented.