China National Gold, the state-owned miner, is in talks to buy Barrick Golds stake in London-listed African Barrick, in a move that could lead to a full takeover and underscores the interest of Chinese miners in acquiring international assets.
Canadas Barrick confirmed on Thursday that it was in preliminary talks about its 74 per cent holding in African Barrick, prompting an 8 per cent jump in the shares of Tanzanias largest gold miner to 425.13p.
Discussions are at an early stage, Barrick said, adding that there is no certainty the sides will reach a deal. Shares in Barrick, which under its recently appointed chief executive Jamie Sokalsky has pledged a new focus on spending discipline and returns, rose 3.7 per cent to C$35.53.
Barrick has been working with investment bank UBS to consider a sale of its African Barrick stake, according to people familiar with the matter, which would trigger a full takeover offer for the London company under UK rules.
Zijin Mining Group, another state-backed Chinese company which has been seeking a higher profile on the world stage, had expressed an interest in African Barrick, people familiar with the matter told the Financial Times.
But Zijins preliminary approach was not considered sufficiently attractive to merit further consideration, they added, and the Canadian group was now talking only to China Gold.
Wu Zhanming, head of the overseas operations department at China Gold, confirmed the talks: We are in a very preliminary phase of contact and discussion [with Barrick Gold Corporation].
China Gold, the countrys largest gold producer, focuses on non-ferrous metals including gold, silver, copper and molybdenum and is directly controlled by Chinas central government.
Should any party acquire more than 30 per cent of African Barrick, the buyer would have to make an offer for the whole company, under UK rules. If an offer for the company materialises either from China Gold or another party a committee of African Barricks independent directors would be charged with safeguarding minority owners interests.
African Barrick was floated in London by its parent in 2010 at 575p a share. But the miner has since struggled to hit production targets and has been battling power disruptions in Tanzania which have also pushed up costs.
With about 17m in reserves, the sheer size of Barricks resource base could be appealing to possible buyers, as could the miners sizable position in Tanzania to other African miners seeking diversification.
Source: FT.com
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China Gold in talks to buy African Barrick - FT.com