Barrick Gold Corporation
) has agreed to sell its Yilgarn South assets (Yilgarn South),
comprising the Granny Smith, Lawlers and Darlot mines, in Western
Gold Fields Limited
) for about $300 million. The deal is expected to close on Oct
The agreement is subject to closing conditions, including
clearance by Australia's Foreign Investment Review Board, consent
of the Western Australian Minister for Mines for the transfer of
the property tenements, and the assignment of certain supply
The deal offers Gold Fields an option to deliver up to half of
the consideration in its own shares to Barrick. Pricing of the
shares will be based on the five day volume weighted average
price, prior to, but not including closing. The acquisition will
provide Gold Fields with an additional 452,000 ounces of
production from the mines.
Barrick, which is among the major players in the gold mining
industry along with
Newmont Mining Corporation
) plans to use the proceeds for general corporate purposes
including debt repayment.
The move testifies Barrick's strategy of focusing on
aggressive cost cutting and low costs assets and doing away with
the non-profitable ones in order to improve its free cash flow
profile. The company also slashed its dividend by 75% in the most
recent quarter in the wake of falling gold prices.
Barrick's Pascua-Lama mine in the Andes, which is the highest
gold mine in the world, has also been going through a rough
patch. Construction at the mine has been delayed due to the
falling gold prices, rising costs and challenging market
conditions. Barrick announced that Copiapo Court of Appeals have
issued a ruling that the company must build a water management
system at the Pascua-Lama project before restarting construction
activities in Chile.
Barrick also recorded a hefty after-tax impairment charge of
$8.7 billion in the second quarter of 2013 due to falling gold
prices. Lower metal prices weighed on its bottom line. Adjusted
earnings (excluding one-time items) fell to 66 cents per share in
the quarter from 82 cents per share in the year-ago quarter, but
was ahead of the Zacks Consensus Estimate of 56 cents.
Barrick has maintained its gold production forecast for 2013
at 7-7.4 million. The company also backed its full year all-in
sustaining cost guidance at $900-$975 per ounce.
Barrick currently retains a Zacks Rank #3 (Hold).
BARRICK GOLD CP (ABX): Free Stock Analysis
GOLD FIELDS-ADR (GFI): Free Stock Analysis
GOLDCORP INC (GG): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis
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