London/Johannesburg – Barrick Gold has started its promised restructuring by selling a trio of Australian gold mines to industry rival Gold Fields.
The $300m sale will help the Canadian miner’s stretched balance sheet and will switch Gold Fields’ main production focus away from western Africa to Australia, where it will bundle assets with its existing mines to try to lower costs.
Barrick, the world’s largest gold miner by volume, flagged the possible sale of the Yilgarn South mines earlier this month, when it posted an $8.6bn quarterly loss. The loss was linked to writedowns to asset values because of the fall in the price of gold this year.
The three mines at Yilgarn South produce 452,000 ounces of gold annually, equivalent to about a quarter of Gold Fields’ annual output. Barrick said the sale would not change its plan to produce between 7m and 7.4m ounces this year.
Nick Holland, Gold Fields’ chief executive, said there was “considerable opportunity for cost synergies” between the Lawlers mine, one of the Yilgarn South group, and its adjacent Agnew mine.
“We plan to immediately consolidate these two operations and rationalise its processing infrastructure and on-site general and administrative expenses as well as capital,” said Mr Holland.
The sale comes as gold miners face some of the industry’s most turbulent times in more than a decade after the price fall.
Gold Fields swung to a quarterly loss and would not pay an interim dividend, the South African group said on Thursday, citing concern over short-term price volatility.
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