Barrick Africa Talks Signal Start of Austerity: Corporate
Barrick Gold Corp. (ABX) Chief Executive
Officer Jamie Sokalsky is starting an austerity drive by seeking
to sell the company’s African unit to China National Gold Group
Corp.
The state-owned Chinese company is in discussions about
Toronto-based Barrick’s 74 percent stake in African Barrick Gold
Plc, the Canadian company said yesterday. The shareholding is
valued at about 1.30 billion pounds ($2.03 billion), based on
African Barrick’s closing price in London today.
A sale would be Barrick’s biggest after it spent more than
$28 billion over 18 years on acquisitions to become the largest
gold miner, with 2011 output of 7.68 million ounces. Sokalsky,
55, who took over as CEO in June after his predecessor Aaron Regent was fired, has said he’s reviewing assets in an effort to
improve returns and cash flow as costs soar. Gold company shares
have dropped to their lowest relative to bullion in 28 years.
“A rationalization of Barrick’s portfolio of mines may be
overdue,” Greg Barnes, an analyst at TD Securities Inc. in
Toronto, said in a note yesterday. “It has clearly become very
difficult for the company to expand production above 8 million
ounces per year and effectively managing a company of the size
and scale of Barrick has been a challenge.”
Tanzanian Mines
Barrick received several expressions of interest in its
African Barrick stake in the past year, according to a person
with knowledge of the situation. The company wasn’t interested
in selling the asset until Sokalsky was appointed and began his
review, said the person, who declined to be identified because
the details haven’t been made public. Barrick isn’t in
discussions with any companies other than China National Gold,
the person said.
Regent, who joined Barrick as CEO in January 2009, put the
company’s four Tanzanian
Category: Africa News
