[miningmx.com] – THE restructuring of principal players in the North
American gold sector was upped a few notches today, with Canada’s Barrick Gold
Corporation confirming reports it was in discussions to sell its 73.9% stake in African
Barrick Gold (ABG).
ABG – a company valued at £1.6bn on the London Stock Exchange – has
underperformed, with its share price having fallen 30% since it was spun out of
Barrick Gold Corp in 2010. It operates four gold mines in Tanzania and produces
about 700,000 oz/year of gold. It has 31 million oz in reserves.
Barrick Gold said it was in “preliminary discussions” with China National Gold Group
(China Gold) regarding its shareholding in African Barrick. The offer would be
extended to all shareholders if accepted.
The Financial Times reported on August 15 that Barrick Gold Corp. was
speaking to Chinese copper and gold company Zijin and had retained UBS to
consider its options. The sale of African Barrick is one of several corporate
reshufflings in the North American gold sector in which Kinross Gold has also
explored the possibility of hiving off assets.
“As noted in Barrick’s 2012 second-quarter report, Barrick has adopted a renewed
focus on maximising shareholder value through a disciplined capital allocation
programme, which includes optimising Barrick’s portfolio of assets and maximising
returns on investment and free cash flow,” Barrick Gold Corp said in a statement.
Jamie Sokalsky, the new Barrick CEO, recently pledged that “returns will drive
production; production will not drive returns’ as he unveiled a review of the miner’s
sprawling portfolio of assets.
The preliminary discussions relating to ABG form part of this programme. Barrick
remains both committed to and confident in ABG, its qualified and experienced
management team and its portfolio of world-class assets, it said.
Discussion were at an early stage and there could be no certainty that they would
result in the sale of its stake, said Barrick Gold Corp. However, if an offer was made
for Barrick Gold’s 73.9% stake, it would be extended to all shareholders.
A 28-day deadline for the closure of the deal as required would not apply to China
Gold, Barrick Gold Corp. said. “Further announcements will be made in due course
as appropriate,” the company said said.
UK broker, Numis, commented: “[It’s] too early to make a call, but it appears there
is a good chance of a sell-down here [in African Barrick stock]. If China Gold
acquires more than 30%, they will be required to make a formal offer for the whole
company”.
