Barrick Gold Inc. is in talks that could result in the sale of its majority holding in spinoff African Barrick Gold to China’s largest gold producer.
The discussions between China National Gold Group Corp. and Barrick, the world’s largest gold miner, are at an early stage and there is no guarantee they will result in the sale of any or all of Barrick’s 73.9 per cent stake, the Toronto-based concern said in a release Thursday.
Still, the news sent African Barrick shares up almost more than nine per cent in trading on the London Stock Exchange at mid-afternoon local time.
In Toronto, parent Barrick Gold’s stock was down 55 cents, or 1.7 per cent, at $32.49 at mid-morning.
ABG is Tanzania’s largest gold producer and one of the five largest gold producers in Africa, but recent production costs have been higher than anticipated, Barrick Gold said last month in its second-quarter financial report.
ABG was formed when Barrick decided to spin off its African operations into a separate company, Its shares began trading on the London exchange in March 2010.
Barrick Gold and ABG said in separate releases that if China Gold decides to acquire more than 30 per cent of the voting interest in ABG it would be required to make an offer for a full takeover.
The Canadian company says the negotiations are in line with “a renewed focus on maximizing shareholder value” adopted in its second-quarter financial report.
That focus includes “optimizing Barrick’s portfolio of assets and maximizing returns on investment and free cash flow.”
“The preliminary discussions relating to ABG form part of this program,” it said, adding that Barrick remains “both committed to and confident in ABG, its qualified and experienced management team and its portfolio of world-class assets.”
In addition to higher costs, African Barrick has faced other problems at the mine, including a report in May 2011 that it was investigating allegations of sexual assaults against local women at its North Mara mine in Tanzania.
Barrick said at the time that a preliminary investigation by ABG had found credible evidence of sexual assaults by members of the Tanzanian police and the company’s security guards.
Earlier that month, North Mara was the site of deadly clashes between police and a crowd of about 800 people trying to steal ore from the mine. Seven people were killed and a dozen more were injured.
Barrick owns and operates gold mines in Canada, the United States, Peru, Argentina, Chile, Australia and Papua New Guinea.
Major development projects include Pueblo Viejo in the Dominican Republic, Cortez Hills in Nevada, and Pascua-Lama on the border between Argentina and Chile.