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Barrick Gold in talks to offload Africa stake
Posted on Thursday, 16 August 2012 12:45
Canadian mining group Barrick Gold confirmed it is in initial discussions with a Chinese peer to sell a controlling stake in its unit in Africa.
The listed group said it was making the announcement after noting recent media speculation regarding its holding in African Barrick Gold (ABG).
It added that talks with China National Gold Group Corporation are at an early stage and there is no guarantee a deal will result.
UBS is acting as financial advisor on the process.
The Financial Times cited a person with knowledge of the talks as suggesting that Chinese gold and copper miner Zijin Mining Group has also signalled its interest in the African business.
But the paper went on to say that a second person familiar with the matter said Barrick had brought an abrupt halt to sale proceedings this week, casting doubt over whether the Canadian company will go ahead with the stake disposal.
ABG is Tanzania’s largest gold producer and one of the five largest in Africa, according to its website.
In March 2010, Barrick Gold partially listed the unit on the London Stock Exchange.
Since then, its shares have underperformed, tumbling from a peak of GBP 6.64 three months after going public, to a low of GBP 3.28 in May, less than half the price.
However, following the announcement today by its Canadian parent, its stock jumped more than 11.0 per cent to GBP 4.38 in early trading.
In its interim results for the six months ended 30th June 2012, ABG reported a 14.0 per cent fall in gold production compared wth the same period in June 2011, from 345,857 ounces to 297,742 ounces.
Revenue dropped 7.6 per cent from USD 578.39 million to USD 534.47 million, while net profit tumbled from USD 120.13 million to USD 65.15 million, a 45.8 per cent decline.
When Barrick Gold released its second quarter 2012 results in July, it acknowledged the decline in gold production and an increase in capital outlay on its South American activities.
Jamie Sokalsky, chief executive of the company, said a thorough review of its mines and projects is being conducted in an effort to establish their value and ability to generate cash, against a backdrop of more disciplined spending.
© Zephus Ltd