(Adds analyst comments, background, share price moves)
By Euan Rocha
TORONTO Feb 4 Silver Standard Resources Inc
said on Tuesday it will buy the Marigold mine in Nevada
for $275 million in cash from joint owners Goldcorp Inc
and Barrick Gold in a move aimed at its boosting its
Vancouver-based Silver Standard, which owns the Pirquitas
silver mine in Argentina, said the transaction adds an operating
mine in a well-established, low-risk mining jurisdiction to its
Marigold, an open-pit gold mine that has been in production
since 1988, is being sold by Barrick and Goldcorp as the two
miners trim their portfolios and shed some higher cost assets.
Analysts said the deal will benefit Barrick and Goldcorp,
Canada's No. 1 and No. 2 gold producers.
"We view the transaction to be positive given the attractive
price received for the asset relative to our estimate," Barclays
analyst Farooq Hamed wrote in a note to clients, adding that he
had valued Marigold at about $120 million.
Hamed said Goldcorp may use some of the proceeds to help
fund its C$2.6 billion ($2.3 billion) hostile bid for Osisko
Mining Corp, or to pay down some of its convertible
senior notes that come due later this year.
Analysts were more skeptical about the merits of the deal
for Silver Standard and shares of the company fell 4.9 percent
to C$8.13 in early trading on the Toronto Stock Exchange.
"With the long life of the asset and the long operating
history, we view the near-term cash flow from operations as a
positive, but highlight that the capital requirements of the
asset are significant, reducing the free cash flow profile of
the asset," Dundee analyst Chris Lichtenheldt said in a note.
"This transaction is consistent with Goldcorp's ongoing
strategy of disciplined portfolio management," Goldcorp Chief
Executive Chuck Jeannes said in a statement.
Barrick also said the sale of its minority interest in
Marigold mine was part of its ongoing portfolio pruning process.
RBC analyst Stephen Walker estimates that Barrick's sale of
its interest in Marigold will lower its overall operating cost
profile by roughly $10 per ounce in 2014.
The move comes just two weeks after Barrick announced that
it has agreed to sell its Kanowna gold mine in Western Australia
to Northern Star Resources Ltd for A$75 million ($66.1 million).
Barrick's recent slew of asset sales are aimed at trimming
its debt load, strengthening its balance sheet and regaining
favor with investors. Last year, Barrick agreed to sell three of
its high-cost gold mines in Australia to Gold Fields
for $300 million.
Shares in Barrick and Goldcorp were down less than 1 percent
in early trading on the Toronto Stock Exchange on Tuesday.
CIBC acted as Silver Standard's financial adviser on the
deal, which is expected to close in April. Goldcorp and Barrick
were advised by BMO Capital Markets and RBC Capital Markets,
(Additional reporting by Sakthi Prasad in Bangalore; Editing by
Supriya Kurane and Peter Galloway)