World's largest gold miner
Barrick Gold Corporation
) has entered into an agreement to sell Barrick Energy Inc. for
roughly C$455 million ($440.8 million) as a part of its portfolio
optimization strategy. Of the total consideration, Barrick will
receive cash proceeds of C$405 million ($392.4 million) and a
gross overriding royalty of roughly C$50 million ($48.4 million)
on certain lands.
Barrick will get roughly C$173 million ($167.6 million) from
the sale of shares and assets of Barrick Energy to
Canadian Natural Resources Limited
). In addition, Barrick will get roughly C$59 million ($57.1
million) from sell of certain assets to Venturion Oil Limited and
roughly C$174 million or $168.5 million from sale of certain
assets to Whitecap Resources Inc. The transactions are expected
to close on or before Jul 31.
The portfolio optimization strategy falls under the
disciplined capital allocation framework. The company is looking
for opportunities to divest certain non-core assets and the
Barrick Energy divestment is a part of that endeavor.
However, Barrick expects to incur half a billion loss in the
second quarter of 2013 owing to the divestment agreement and
related transactions. Of the $500 million estimated loss, roughly
$90 million relates to goodwill, which is the difference between
the net proceeds and the carrying value of Barrick Energy as of
Jun 30, 2013.
The financial advisors to Barrick for these transactions are
Rothschild and Scotia Waterbus. Norton Rose Fulbright Canada LLP
is the legal counselor.
Barrick Gold currently carries a Zacks Rank #3 (Hold).
Other companies in the mining industry with favorable Zacks
Midway Gold Corp.
NovaGold Resources Inc.
). Both of them carry a Zacks Rank #2 (Buy)
BARRICK GOLD CP (ABX): Free Stock Analysis
CDN NTRL RSRCS (CNQ): Free Stock Analysis
MIDWAY GOLD CP (MDW): Free Stock Analysis
NOVAGOLD RSRCS (NG): Free Stock Analysis
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