Canadian miner Barrick Gold Corp. (ABX.TO: Quote,ABX: Quote) is exploring a sale of its 74 percent stake in its subsidiary African Barrick Gold plc (ABG.L,ABGLF.PK), the Financial Times reported Wednesday, citing people familiar with the matter. Barrick has reportedly hired UBS AG to evaluate strategic options for African Barrick.
According to the FT report, the move could prompt a full takeover of the London-listed African Barrick, which was partially floated in 2010. African Barrick is the largest gold producer in Tanzania and one of the five largest gold producers in Africa.
Further, the FT reported that Chinese copper and gold miner Zijin Mining Group had indicated a preliminary interest in African Barrick.
However, the report cited another person as saying that Barrick had abruptly halted work on a possible sale this week, casting doubts as to whether the Canadian company will go ahead with a sale of African Barrick.
State-controlled Zijin is the largest gold producer and second largest copper producer in China. The Hong Kong-listed company also has operations in zinc, tungsten and iron ore.
Zijin said in early August that it has acquired a more than 50 percent stake in Australia-based Norton Gold Fields. At that time, the company noted that the acquisition was the "first successful example for Chinese enterprise to take over large-sized gold mine in production".
Since its listing in London, African Barrick has been struggling to attain its its production targets. In late July, African Barrick reported a 46 percent decline in pre-tax profit for the first half of the year, reflecting a 14 percent decline in production and higher costs due to increased reliance on expensive diesel-fueled power generation.
Meanwhile, Barrick Gold recently reported a 35 percent decline in profit for the second quarter, reflecting lower gold production, lower copper prices and higher operating costs.
At that time, Barrick Gold also said that preliminary results from a review of the Pascua-Lama gold mine, on the border between Chile and Argentina, indicated an about 50 to 60 percent increase in capital costs.
ABX closed Wednesday's trading on the New York stock exchange at $34.69, up $0.55 or 1.61 percent on a volume of 5.30 million shares.
On the London stock exchange, ABG.L closed Wednesday's trading at 395.00 pence, down 5.00 pence or 1.25 percent on a volume of 230,125 shares.
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by RTT Staff Writer
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