By Euan Rocha and Sherilee Lakmidas
TORONTO/JOHANNESBURG Aug 22 Barrick Gold Corp
, the world's largest gold producer, on Thursday said it
has agreed to sell three of its high-cost gold mines in
Australia to Gold Fields Ltd for $300 million.
The sale is the latest move by Toronto-based Barrick to
re-shape its portfolio and focus on lower cost assets, as it
seeks to shore up its balance sheet in the face of weaker metal
prices and ballooning capital expenditure costs at its
Pascua-Lama gold project high in the South American Andes.
Barrick, which recently posted a $8.7 billion writedown and
slashed its dividend by 75 percent, has been hurt by the slump
in metal prices and weighed down by a balance sheet that carries
net debt of $11.6 billion, following its costly Equinox takeover
Barrick began to explore a sale of the Yilgarn South mines -
Granny Smith, Lawlers and Darlot in Western Australia early this
year. The mines accounted for 6 percent of Barrick's gold output
in 2012, and less than 2 percent of the gold miner's proven and
probable reserves, as of December 31, 2012.
"The agreement to divest Yilgarn South demonstrates further
progress as we work to optimize the company's portfolio," said
Barrick Chief Executive Jamie Sokalsky, in a statement.
The deal, expected to close in early October, is subject to
regulatory approvals. Barrick said it plans to use the proceeds
of the deal for general corporate purposes and debt repayment.
Analysts cheered the deal, but noted that the sale pegs the
value of the assets at $115 an ounce, much lower than the North
American group average of about $280 per ounce.
"Although the price received is lower than we expected, we
view the sale as necessary to help pay down Barrick's high debt
level," said Scotiabank analyst Tanya Jakusconek, in a note to
Shares in Barrick were up 3.1 percent at $19.63 in trading
on the New York Stock Exchange.
Gold Fields will have the option to deliver up to 50 percent
of the consideration in its own common shares to Barrick in lieu
of the equivalent amount of cash consideration at closing, said
the companies in separate statements.
Following the acquisition, Gold Fields said Australia will
be its largest regional production centre.
Barrick began to explore a sale of the mines after its
attempt to sell its majority stake in African Barrick Gold
to a Chinese buyer failed early in 2013, dashing hopes
of a potential $3 billion deal for the underperforming unit.
Last month, Barrick announced it had agreed to sell its
energy businesses for about C$455 million ($435.6 million).
UBS Securities Canada Inc and BofA Merrill Lynch acted as
financial advisors to Barrick on the Australian asset sales.