Barrick to Sell Energy Assets - Analyst Blog
July 24 2013 - 4:00PM
Zacks
World's largest gold miner
Barrick Gold Corporation (ABX) 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 (CNQ). 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 Rank are Midway Gold
Corp. (MDW) and NovaGold Resources Inc.
(NG). Both of them carry a Zacks Rank #2 (Buy)
BARRICK GOLD CP (ABX): Free Stock Analysis Report
CDN NTRL RSRCS (CNQ): Free Stock Analysis Report
MIDWAY GOLD CP (MDW): Free Stock Analysis Report
NOVAGOLD RSRCS (NG): Free Stock Analysis Report
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