Barrick offering lands with a thud, shares slide

Fri Nov 1, 2013 6:20pm EDT
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By Allison Martell and Euan Rocha

TORONTO (Reuters) - A massive public share offering from Barrick Gold Corp (ABX.TO: Quote) proved a tough sell, market sources said on Friday, as the price of gold dropped and investors digested news that the miner had shelved a key growth project.

Toronto-based Barrick said late on Thursday it would issue up to $3.45 billion worth of common shares at $18.35 a share in a deal to pay down part of its heavy debt load.

Shares of the world's biggest gold producer closed 34 cents below the offer price on Friday.

Barrick would not comment on the deal, which was announced hours after the Toronto-based company said it was shelving its massive Pascua-Lama gold-silver mine, high in the Andes on the border between Chile and Argentina.

"The timing of the whole deal was really bad. They announced it last night, the Europeans were basically gone, gold had just had a crappy day and all the nice young traders on this end were getting their kids dressed up for trick or treating," said a trading source who asked not to be named.

Pascua-Lama had been a key growth project for Barrick but also a drain on its cash reserves.

Barrick's New York-listed stock closed down 7.1 percent at $18.01, its lowest level in more than two weeks. Shares of precious metal miners were broadly lower as the price of gold fell to a three-week low. <GOL/>

The weak reception for the offering does not affect the price Barrick receives for its shares. It could hurt the deal's underwriters, led by RBC Capital Markets (RY.TO: Quote), Barclays (BARC.L: Quote) and GMP Securities LP GMP.TO.   Continued...