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Barrick Plans Listing of TZ Assets also considering DSE listing

Discussion in 'Jukwaa la Siasa' started by Alpha, Feb 18, 2010.

  1. A

    Alpha JF-Expert Member

    Feb 18, 2010
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    Barrick plans London listing for African assets

    By Matthew Kennard
    Published: February 18 2010 15:46 | Last updated: February 18 2010 17:26

    Barrick Gold of Canada, the world’s largest bullion producer, is set to spin off its African mines and list them on the London Stock Exchange.
    The company said it would retain a 75 per cent majority stake in the new vehicle, African Barrick Gold, but make the remaining equity available to institutional investors.
    ABG’s assets comprise four mines in north-west Tanzania, representing 9.6 per cent of Barrick’s total gold production. Barrick has a market capitalisation of about $37bn, and if a similar valuation is applied to ABG its market capitalisation could be as much as $3.7bn (£2.4bn), making it a potential entrant to the FTSE 100.

    “The key thing for Barrick has been looking at the way it can get its assets optimised,” said Greg Hawkins, ABG chief executive. “With the African assets, sometimes it’s been difficult to grow because there are so many other huge Barrick projects around the world and Africa is often a bit smaller and hard to get on the radar.”
    Barrick has been operating in Tanzania for a decade and its assets there produced 716,000 ounces of gold in 2009, which would make it the largest UK-listed gold producer at flotation and the fourth largest working in Africa. ABG hopes to raise annual production to 1m oz within four years.
    If the listing is successful, ABG said it expected to have about $280m of cash on its balance sheet.

    “One overarching thing about this is that companies the size of Barrick and Newmont are now so large that it becomes very hard to grow. If you make an acquisition or expand, that makes very little difference in overall size and can go unnoticed,” said Richard Morgan, an analyst at Mirabaud. “You could argue that splitting a company up is inevitable when you get to an ex-growth position.”
    In 2008, Industrias Penoles SAB, a Mexican miner, span off its silver assets into a new London-listed vehicle, Fresnillo, which has since seen its share price soar.
    Barrick’s primary listing is on the Toronto Stock Exchange, but London-based investors are seen as more favourable toward African assets.
    “Our understanding is that Africa is more attractive for the investor base in Europe and London,” said Mr Hawkins. “There’s a variety of reasons for this: London’s neatly in the time zone, there’s the history. We think this is a real opportunity to take advantage of that.”
    The competition for London-listed gold-producers is especially thin.
    ”It is a marketing thing – London is starved of large cap gold miners,” said Joe Lunn, an analyst at FinCapp. ”Randgold Resources is the only mid to large-cap producer in London and as such commands a significant premium. In spinning off its African assets, Barrick will be hoping this new company commands a similar premium.”
    ABG said it was also considering a secondary listing on the Tanzanian Stock Exchange.
    In 2009, ABG generated earnings before interest, taxation and depreciation of $249.5m on revenues of $693.4m. Its cash cost of gold production on a by-product basis was $533 per ounce.

  2. A

    Alpha JF-Expert Member

    Feb 18, 2010
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    TORONTO (Reuters) - Barrick Gold Corp (ABX.TO) said on Thursday it will spin off its African gold assets into a new publicly traded company, and will also spend $475 million to buy an additional 25 percent of the massive Cerro Casale copper-gold project in Chile from partner Kinross Gold (K.TO).
    Barrick announced the moves as it unveiled a doubling of fourth-quarter operating profit, driven by gold prices that soared to record levels in the final three months of 2009.
    The new company, to be called African Barrick Gold (ABG), will list on the London Stock Exchange and will hold Barrick's African gold mines and exploration properties. Barrick plans to retain a 75 percent interest in ABG initially.
    ABG also intends to seek a future listing on the Dar es Salaam Stock Exchange in Tanzania.
    Barrick, the world's top gold producer, operates four African mines, all in Tanzania.
    ABG is expected to produce 800,000 to 850,000 ounces of gold in 2010, with total reserves of 16.8 million ounces as of December 31.

    "Size-wise it's bigger than (mid-tier miner) Randgold Resources (RRS.L) and certainly it would be... one of the prime gold listings on the LSE," said Leon Esterhuizen, an analyst at RBC Capital Markets in London.

  3. Injinia

    Injinia JF-Expert Member

    Feb 18, 2010
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    Why don't they put the country (Tanzania) on the stock exchange while they are at it, they practically own it anyhow!!

    The fourth largest gold producing company, with all it's African mines being in Tanzania yet look at the sorry state we are in. Shame