Barrick Africa yauzwa Kwa Wachina.

Barrick Gold explores sale of Africa stake

Canadian miner Barrick Gold has been exploring a sale of its 74 per cent stake in African Barrick, the London-listed gold producer, in a move that could prompt a full takeover.


According to people familiar with the matter, Barrick has been working with UBS to consider its options for African Barrick, which the Canadian miner, the largest gold producer globally, partially floated in 2010.


One person with knowledge of the discussions suggested that Zijin Mining Group, the Chinese copper and gold miner, had indicated a preliminary interest in African Barrick.


But a second person familiar with the situation added that Barrick's team had abruptly halted work on a possible sale this week, throwing into doubt whether the Canadian company will proceed.


African Barrick, Tanzania's largest gold producer, has performed poorly since being spun off from its Canadian parent in 2010, with its shares slumping about 30 per cent since listing.


An offer for Barrick's stake in African Barrick could trigger an offer for the whole of the London-listed company, people familiar with the matter said, putting the onus on its independent directors to safeguard minority owners' interests.

The UK-listed miner's shares fell 0.7 per cent to 397.2p on Wednesday. African Barrick, Barrick and UBS declined to comment. Zijin could not be reached for comment.


Barrick Gold recently signalled it was reining in its expansion plans and introducing a renewed focus on disciplined spending, as it announced a big cost over-run at its key development project in South America.


Jamie Sokalsky, the new Barrick chief executive, pledged that "returns will drive production; production will not drive returns" as he unveiled a review of the miner's sprawling portfolio of assets.


Since its listing in London, African Barrick has struggled to hit its production targets, as interruptions to its power supply from Tanzania's national grid disrupted work. Reliance on expensive diesel generation has also pushed costs higher.


The African miner in July said production had fallen 14 per cent in the first half of the year, as lower grades in its mines weighed on output and increased costs.


Zijin's interest in African Barrick could prompt other gold miners to consider a tilt at the group, which has a market value of £1.6bn. Randgold, the London-listed miner with operations in Mali, and AngloGold Ashanti, the South African miner, have previously been named as possible buyers of African Barrick.


State-controlled Zijin, which is listed in Hong Kong, is the largest gold producer and second largest copper producer in China, and also has operations in zinc, tungsten and iron ore.


The Chinese group has, thus far, had a limited profile on the world stage. In August, Zijin said it had bought more than 50 per cent of Norton Gold Fields, an Australian company, calling the move "the first successful example for Chinese enterprise to take over large-sized gold mine in production

Source:http://www.ft.com/cms/s/0/883785b8-e6f6-11e1-8a74-00144feab49a.html#axzz23d4sszdw