Barrick Gold Ends Talks with China Gold over African Barrick

January 8, 2013 at 11:04


Shares in African Barrick Gold lost a fifth of their value on Tuesday after the collapse of talks to sell a majority stake in the London-listed miner to a Chinese group.

China National Gold, a state-owned miner, has ended talks to buy Barrick Gold’s 74 per cent stake in African Barrick, which is Tanzania’s biggest gold producer.

African Barrick, which has struggled to live up to the production targets set at its 2010 float, said the talks, which were revealed in August, had created “an extended period of uncertainty” for the group.

The group’s board has now asked its management to conduct an operational review of the business, “with the aim of recalibrating our operations so as to drive improved returns from the asset base whilst enhancing the certainty of delivery”.

The company had unveiled weak third-quarter results in October, scaling down its full-year production forecast as disruptions at its operations dragged down output.

Shares in African Barrick fell 20 per cent to 353.1p in early morning trading in London on Tuesday, valuing the company at £1.4bn. They floated at 575p in 2010.

China National Gold’s interest in the group had been viewed as further evidence of growing interest from Chinese companies in acquiring gold assets globally.

It followed Zijin Mining’s takeover of Australia’s Norton Gold Fields and Shandong Gold’s acquisition of a 51 per cent stake in Australia’s Focus Minerals.

Jamie Sokalsky, Barrick Gold chief executive, said his company was only willing to proceed with a disposal of its African Barrick stake if it would “generate acceptable value for Barrick”.

“African Barrick Gold’s assets hold significant potential, and we will continue to look for ways to best realise that value for our shareholders,” he added.

Further details of the review would be disclosed with its annual results in mid-February, the FTSE 250 company added.