* China Natl no longer in talks to buy African Barrick stake
* Barrick Gold says approach "prudent and disciplined"
* Says will only look at deals generating acceptable value
* African Barrick shares slump 19 pct
* CEO says Q4 results will be "reasonably positive"
(Adds background, Toronto share price)
By Sarah Young
LONDON, Jan 8 Barrick Gold Corp has
ended talks on selling a stake in majority-owned African Barrick
Gold to a Chinese buyer, dashing hopes of a potential
$3 billion deal for the underperforming unit.
Canadian mining major Barrick Gold, which owns 74 percent of
London-listed African Barrick, had said in August it was in
early-stage talks with state-owned China National Gold about the
possible sale of all or part of its stake.
Shares in African Barrick slumped around 19 percent to 359
pence in afternoon trading, hitting their lowest level for five
months, on disappointment that the Chinese would no longer be
offering an exit from a stock which has frequently traded well
below its 575p listing price set in March 2010.
The ending of talks quashes the prospect of what could have
been one of China's largest mining deals in Africa - if China
National Gold had opted to buy the whole of African Barrick, the
deal would have been worth around $3 billion.
"We are approaching this in a prudent and disciplined manner
and will only proceed with opportunities that generate
acceptable value for Barrick," Barrick Gold Chief Executive
Jamie Sokalsky said in a statement on Tuesday.
China National Gold declined comment on the ending of talks.
Chinese companies had made a string of deals in gold miners
in 2012 as their domestic demand soared for bullion, sought for
jewelry and as an inflation hedge, and had been increasingly
seen as deep-pocketed investors.
In the last six months for instance Zhongrun Resources
Investment Corp agreed to buy a stake in Noble
Mineral Resources Ltd, Shandong Gold Group
agreed to buy part of Focus Minerals Ltd, and Zijin
Mining Group acquired Norton Gold Fields.
Barrick, the world's largest gold producer with output of
7.7 million ounces in 2011, reiterated it was evaluating all of
its portfolio as it grapples with falling profits and soaring
costs. Its shares were down 0.7 percent at $33.35 shortly after
the start of trade on the Toronto Stock Exchange.
African Barrick said it would carry out a review aimed at
improving returns from its projects primarily based in Tanzania.
Analysts said its downgrading of its 2012 production
forecast in October, during China Gold's "due diligence"
process, would likely have hindered discussions on price between
the company's parent and suitor.
Annual output was forecast 5 to 10 percent lower than the
bottom of a previous forecast range of between 675,000 and
725,00 ounces, the company said, citing a rise in illegal mining
at one site and a failure to reach planned levels at two others.
Since being listed, African Barrick has also suffered a
range of setbacks from villagers armed with machetes invading a
mine to power woes and fuel thefts.
Analyst Dmitry Kalachev at brokerage Canaccord said African
Barrick's review of its operations was needed, as since the
company's IPO "they've never actually met their production
guidance, so 2013 will be a test for them."
Since it listed the stock has lagged rival London-listed
Randgold Resources by around 50 percent and the STOXX
Europe 600 mining index by around 25 percent.
However, over the past 12 months it has outperformed South
Africa-focused peers such as Harmony Gold by around 20
percent and AngloGold by around 15 percent, after the
country's mining industry was last year hit by violent wildcat
African Barrick Chief Executive Greg Hawkins said in an
interview the company would report a "reasonably positive"
fourth-quarter performance. Figures are due on Jan. 17.
He said the company's review would involve looking closely
at production costs which had soared in the third quarter.
Rising costs are a problem faced by companies across the
mining industry and reflect factors such as higher wages and
pressure to exploit lower grades in more difficult geographies.
Hawkins said he saw the company's Bulyanhulu project as a
key focus for investment, but declined to be drawn on whether
the review could result in the sale of other assets.
"I think that's pre-emptive of me to speculate on," he said.
African Barrick said it planned to keep its dividend at the
2011 level, when it paid out $67 million or 16.3 cents per
(Additional reporting by David Stanway in Beijing; Editing by
Kate Holton and David Holmes)