Barrick to sell three Australian mines to Gold Fields

Thu Aug 22, 2013 5:45pm EDT
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By Euan Rocha and Sherilee Lakmidas

TORONTO/JOHANNESBURG (Reuters) - Barrick Gold Corp (ABX.TO: Quote), the world's largest gold producer, on Thursday said it has agreed to sell three of its high-cost gold mines in Australia to Gold Fields Ltd (GFIJ.J: Quote) for $300 million.

The sale is the latest move by Toronto-based Barrick to re-shape its portfolio and focus on lower cost assets, as it seeks to shore up its balance sheet in the face of weaker metal prices and ballooning capital expenditure costs at its Pascua-Lama gold project high in the South American Andes.

Barrick, which recently posted a $8.7 billion writedown and slashed its dividend by 75 percent, has been hurt by the slump in metal prices and weighed down by a balance sheet that carries net debt of $11.6 billion, following its costly Equinox takeover in 2011.

Barrick began to explore a sale of the Yilgarn South mines - Granny Smith, Lawlers and Darlot in Western Australia early this year. The mines accounted for 6 percent of Barrick's gold output in 2012, and less than 2 percent of the gold miner's proven and probable reserves, as of December 31, 2012.

"The agreement to divest Yilgarn South demonstrates further progress as we work to optimize the company's portfolio," said Barrick Chief Executive Jamie Sokalsky, in a statement.

The deal, expected to close in early October, is subject to regulatory approvals. Barrick said it plans to use the proceeds of the deal for general corporate purposes and debt repayment.

Analysts cheered the deal, but noted that the sale pegs the value of the assets at $115 an ounce, much lower than the North American group average of about $280 per ounce.

"Although the price received is lower than we expected, we view the sale as necessary to help pay down Barrick's high debt level," said Scotiabank analyst Tanya Jakusconek, in a note to clients.   Continued...