TORONTO Barrick Gold Corp (ABX.TO) said on Monday it plans to sell about 13.5 percent of its holdings in its majority-owned subsidiary African Barrick Gold ABGL.L.
Toronto-based Barrick, which currently owns a roughly 303.25 million shares in African Barrick, is selling 41 million shares. The gold miner will still own a majority stake of just over 60 percent in the Africa-focused miner following the close of the transaction.
Barclays analyst Farooq Hamed believes the stake sale will result in proceeds of just over $200 million that will help bolster the gold miner's balance sheet and allow it to trim its debt load.
The move is the latest attempt by the world's largest gold miner to trim its asset base and reduce its exposure to higher cost assets.
In 2012, the company attempted to sell a part, or all of its interest in African Barrick Gold to China National Gold Group, but those talks fell apart last year.
The company has since gone on to sell a number of non-core assets. In January, Barrick Gold agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources for A$75 million.
Last August, the company said it has agreed to sell its Granny Smith, Lawlers and Darlot gold mines in Western Australia to Gold Fields (GFIJ.J) for $300 million.
The sale of the 41 million African Barrick shares represents about 10 percent of the company's outstanding share base.
The shares will be sold to institutional investors and Barrick has appointed UBS Ltd, J.P. Morgan Securities and RBC Europe Ltd to act as joint book runners in relation to the deal.
Barrick's move to trim its stake comes at a time when shares in African Barrick have been on a tear, largely driven by a bounce in the price of gold since the beginning of the year. The price of spot gold has risen more than 11 percent since the beginning of the year to around the $1,340 an ounce level.
The London-listed shares of African Barrick have risen more than 65 percent over the same period, as the company told its investors that they will see a big increase in gold output and stringent cost cutting over the coming year.
Barrick has undertaken not to dispose of any further African Barrick shares without the consent of the book runners during the next 120 days. The consent shall not be required, if African Barrick receives a full takeover bid within the next six months.
Barrick is also allowed to do a single sale of 10 percent to 20 percent of its remaining holdings African Barrick to a single purchaser as part of a single transaction, provided the buyer agrees to be bound by a similar restriction for the remainder of the lock-up period.
(Reporting by Euan Rocha; Editing by Grant McCool)