LONDON--Tanzania's largest gold miner, African Barrick Gold
(ABG.LN), Tuesday launched a full review of its operations
following the failure of talks that could have seen China National
Gold Group Corporation acquire a controlling stake in the company
from Barrick Gold Corp (ABX).
The talks failed after the Chinese company and Barrick Gold
could not agree a value for the 73.9% stake in ABG. At the current
stock price of 354 pence a share, Barrick's stake in ABG is worth
GBP1.34 billion ($2.16 billion). The news caused ABG's shares to
fall more than 20% to a near six-month low.
At 1158 GMT shares in ABG were down 18.3%, or 81.4 pence, at
362.6 pence.
"[The] news will come as a disappointment to some who saw it as
a potential exit from the under-performing [ABG] stock, with a
price mooted around the 20p mark," said equity analyst Cailey
Barker of Numis Securities in a note.
Barrick Gold said in a statement that despite the end of the
talks, it remains committed to supporting ABG in fully realizing
the potential of its business.
Someone who answered the telephone at the China National Gold
Group Corporation declined to take questions or convey calls to the
appropriate office.
ABG's shares have fallen 36% since they started trading in
London in March 2010, following the company's spin-off from
Barrick. ABG has since then been dogged by unrest at one of its
mines, and other production setbacks. It is set to deliver a
third-consecutive year of lower gold output in 2012, although its
Chief Executive Greg Hawkins told Dow Jones Newswires that
production should stabilize this year, and begin to rise again in
2014.
In October ABG revised down its 2012 gold output by 5% to 10%
below its previous range of 675,000 troy ounces to 725,000 ounces,
due in part to power outages. Mr. Hawkins said that he felt
comfortable that the company would achieve that target after a
step-up in gold production during the fourth quarter.
The company has decided to pay $67 million in dividends for
2012, on a par with 2011, in order to convince shareholders to
stick with the company, he said.
African Barrick Gold has five operating gold mines, all located
in northwest Tanzania, and several exploration projects at various
stages of development.
Mr. Hawkins said the company has embarked on a full operational
review of its business, with the aim of delivering more cash flow
from its asset base by deploying capital more effectively and
making sure it has an appropriate organizational structure. He said
the company wasn't considering asset sales and was still open to
acquiring assets.
Mr. Hawkins said that Barrick Gold has made it clear that it
sees considerable long-term value in the ABG asset base.
(Carlos Tejada in Beijing contributed to this report.)
Write to Alex MacDonald at alex.macdonald@dowjones.com
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