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Barrick Gold Corp. is in discussions to sell the African assets as the world’s largest gold miner struggles to rein in massive cost overruns and focus on key projects.
In a statement on Thursday, Toronto-based Barrick said it was in preliminary discussions with China National Gold Group Corporation regarding its 74 per cent holding in African Barrick Gold PLC, spun off two years ago as it removed the higher cost mines from its books.
“Discussions are at an early stage, and there can be no certainty that these discussions will result in the acquisition of all or part of Barrick’s holding in ABG,” Barrick said in a statement.
“As noted in Barrick’s 2012 Second Quarter Report, Barrick has adopted a renewed focus on maximizing shareholder value through a disciplined capital allocation program which includes optimizing Barrick’s portfolio of assets and maximizing returns on investment and free cash flow.”
Barrick is struggling to right itself as it emerges from some of the most most tumultuous quarters in its history as one of Canada’s largest companies. In the past three months the company fired its chief executive officer and then announced a massive cost overrun and year-long delay at its long-awaited Pascua-Lama gold mine in the southern Andes. It also slashed its 2015 production target to eight million ounces from nine million previously.
As chief executive officer Jamie Sokalsky took the helm on June 6, the stock price continued to swoon and is down about 30 per cent since its level of a year ago. He promised in late July to begin a turnaround at the company that would see it focus on returning value to shareholders.
“In my view, rate of return should drive production, not the other way around,” Mr. Sokalsky said when the company announced its second quarter results on July 26.
African Barrick Gold trades on the London Stock Exchange and includes four producing mines, Bulyanhulu, North Mara, Tulawaka and Buzwagi.
Barrick’s equity interest in 2011 production was 509,000 million ounces of gold at total cash costs of $692 per ounce, according to the company’s website. In 2012, it expects equity gold production to be in the range of 500,000-535,000 ounces, reflecting its 73.9 per cent ownership.
The original version of this article can be found on the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/barrick-in-talks-to-sell-africa-stake-to-china-national-gold/article4483591/