Barrick ends talks to sell African unit to Chinese buyer

Tue Jan 8, 2013 11:02am EST
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By Sarah Young

LONDON (Reuters) - Barrick Gold Corp (ABX.TO: Quote) has ended talks on selling a stake in majority-owned African Barrick Gold ABGL.L to a Chinese buyer, dashing hopes of a potential $3 billion deal for the underperforming unit.

Canadian mining major Barrick Gold, which owns 74 percent of London-listed African Barrick, had said in August it was in early-stage talks with state-owned China National Gold about the possible sale of all or part of its stake.

Shares in African Barrick slumped around 19 percent to 359 pence in afternoon trading, hitting their lowest level for five months, on disappointment that the Chinese would no longer be offering an exit from a stock which has frequently traded well below its 575p listing price set in March 2010.

The ending of talks quashes the prospect of what could have been one of China's largest mining deals in Africa - if China National Gold had opted to buy the whole of African Barrick, the deal would have been worth around $3 billion.

"We are approaching this in a prudent and disciplined manner and will only proceed with opportunities that generate acceptable value for Barrick," Barrick Gold Chief Executive Jamie Sokalsky said in a statement on Tuesday.

China National Gold declined comment on the ending of talks.

Chinese companies had made a string of deals in gold miners in 2012 as their domestic demand soared for bullion, sought for jewelry and as an inflation hedge, and had been increasingly seen as deep-pocketed investors.

In the last six months for instance Zhongrun Resources Investment Corp 000506.SZ agreed to buy a stake in Noble Mineral Resources Ltd (NMG.AX: Quote), Shandong Gold Group SDONGA.UL agreed to buy part of Focus Minerals Ltd FML.AX, and Zijin Mining Group 601899.SS acquired Norton Gold Fields NGF.AX.   Continued...