Chinese buyer eyes stake in African miner
Source: Agencies |
August 17, 2012, Friday
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Print Edition
Print Edition
THE world's largest gold miner Barrick Gold is in talks to sell a majority stake in its African unit to a Chinese buyer, the first move by new Chief Executive Jamie Sokalsky to clear out poorly performing businesses and revive its flagging shares.
News of the talks with China National Gold Group, which controls the nation's largest deposits of the metal, sent African Barrick Gold shares up as much as 13 percent in London yesterday, as investors bet the buyer would be prepared to pay a premium to help satisfy China's demand for the metal.
Canadian miner Barrick is grappling with falling profits, soaring costs and the fallout from what some investors see as mistakes, including the takeover of African copper miner Equinox Minerals last year.
Barrick ousted its previous chief executive in June, saying it was frustrated the stock had languished since he took the helm while bullion prices had surged. The shares are down 30 percent over the past year at levels last seen in late 2008.
Sokalsky, who took over in June, is under pressure to show he is investing money wisely. He is reviewing the company's operations, including the 74 percent stake in the African unit, which has disappointed investors since it was listed separately in London in 2010.
African Barrick, whose shares at Wednesday's close were almost a third below their listing price, is one of Africa's largest gold miners, operating mainly in Tanzania. But it has suffered a series of setbacks, ranging from villagers armed with machetes invading its North Mara mine to power outages and fuel and metal thefts.
"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 Gold said yesterday.
At Wednesday's closing price, the 74 percent stake was worth almost US$1.9 billion.
An offer for more than 30 percent of African Barrick would trigger a full takeover offer for Tanzania's largest gold producer from the Chinese suitor under UK takeover rules.
"African Barrick has always looked like it offered good value albeit at a high risk, and if the potential acquirer can get the asset and is comfortable with the risk, you will be able to get a reasonable set of assets for a good price," Investec analyst Hunter Hillcoat said.
"This now officially puts (African Barrick) in play."
News of the talks with China National Gold Group, which controls the nation's largest deposits of the metal, sent African Barrick Gold shares up as much as 13 percent in London yesterday, as investors bet the buyer would be prepared to pay a premium to help satisfy China's demand for the metal.
Canadian miner Barrick is grappling with falling profits, soaring costs and the fallout from what some investors see as mistakes, including the takeover of African copper miner Equinox Minerals last year.
Barrick ousted its previous chief executive in June, saying it was frustrated the stock had languished since he took the helm while bullion prices had surged. The shares are down 30 percent over the past year at levels last seen in late 2008.
Sokalsky, who took over in June, is under pressure to show he is investing money wisely. He is reviewing the company's operations, including the 74 percent stake in the African unit, which has disappointed investors since it was listed separately in London in 2010.
African Barrick, whose shares at Wednesday's close were almost a third below their listing price, is one of Africa's largest gold miners, operating mainly in Tanzania. But it has suffered a series of setbacks, ranging from villagers armed with machetes invading its North Mara mine to power outages and fuel and metal thefts.
"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 Gold said yesterday.
At Wednesday's closing price, the 74 percent stake was worth almost US$1.9 billion.
An offer for more than 30 percent of African Barrick would trigger a full takeover offer for Tanzania's largest gold producer from the Chinese suitor under UK takeover rules.
"African Barrick has always looked like it offered good value albeit at a high risk, and if the potential acquirer can get the asset and is comfortable with the risk, you will be able to get a reasonable set of assets for a good price," Investec analyst Hunter Hillcoat said.
"This now officially puts (African Barrick) in play."
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