UPDATE 1-Barrick mulls options to raise cash, reduce debt -sources
By Euan Rocha and Allison Martell
TORONTO Oct 30 (Reuters) - Barrick Gold, which is attempting to reduce its debt load, is considering a wide range of options from a strategic equity investment to further streaming deals that yield upfront cash, according to several sources familiar with the situation.
The sources, who asked not to be named because the talks are confidential, said the discussions have so far been exploratory in nature and no deals are imminent at this time.
A spokesman for Barrick declined to comment on the matter.
One source said Barrick's management has met with top fund managers in Asia and the Middle East to gauge the interest in a possible private placement-style equity deal, in order to raise capital and bring on board a large, long-term strategic investor as a move to boost market confidence in the company.
Such a move would be similar to the one taken by diversified miner Teck Resources Ltd, which in 2009 sold a roughly 17 percent stake in itself to Chinese sovereign wealth fund, CIC or China Investment Corp. At the time, Vancouver-based Teck was struggling under a massive debt load as it acquired Fording Coal for $14.1 billion, just as the global financial crisis began and commodity prices imploded.
Barrick, the world's top bullion miner, has faced a similar struggle over the last year, as the price of gold has fallen 21 percent and costs at Pascua Lama - its massive gold project on the border of Chile and Argentina, have soared.
Shares in Barrick have fallen 46 percent over then last 12 months. The company's shares hit C$14.22 in July, their lowest point since 1992, but have since rebounded a bit and the stock closed on Wednesday at C$21.55.
The Toronto-based gold miner will be announcing its third-quarter results on Thursday, and is expected to provide analysts and investors an update on capital costs at Pascua Lama, which were last pegged at up to $8.5 billion.
Another source briefed on the matter, said Barrick is also considering a further streaming deal to pay for any additional capital outlay at Pascua Lama. Such deals, give miners cash up front in exchange for an agreement to sell future production of a by-product like silver at a discounted price.
Barrick already has a streaming deal in place at Pascua Lama - In 2009, Silver Wheaton Corp bought 25 percent of the life-of-mine silver production from the project.
Bloomberg, earlier on Wednesday, reported that the company is also considering selling part of its copper business, or even a stake in Pascua Lama, citing people with knowledge of the matter. The report said Barrick has not settled on a strategy, and that there is no certainty a deal will occur.
In an interview with Reuters last month, Barrick's Chief Executive Jamie Sokalsky categorically denied that the company has any plans to sell its copper assets.
"They are still core assets for us," said Sokalsky during an interview in Denver. "It is not about just gold or copper, it's about an asset that generates returns and free cash flow."
Barrick owns copper mines and projects in South America, Africa and the Middle East.
The company, in August, agreed to sell three of its higher-cost gold mines in Australia to Gold Fields for $300 million.
Sokalsky told Reuters last month that the company remains in talks about some further asset sales with the focus on divesting smaller, higher-cost mines.
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