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Chinese companies seen bidding for African Barrick Gold
By Bryce Elder, Helen Thomas, and Anousha Sakoui
Financial Times, London
Thursday, August 16, 2012
http://www.ft.com/intl/cms/s/0/883785b8-e6f6-11e1-8a74-00144feab49a.html
Barrick Gold, the Canadian mining group, confirmed on Thursday it is in discussions to sell a 74 per cent stake in African Barrick Gold, the London-listed gold producer, to a Chinese company.
Toronto-based Barrick said talks were under way with China National Gold Group Corp., a Beijing-based mining group, but that they were at a preliminary stage.
However, one person with knowledge of the discussions suggested that Zijin Mining Group, the Chinese copper and gold miner, had also indicated a preliminary interest in African Barrick.
But a second person familiar with the situation added that Barrick's team had abruptly halted work on a possible sale this week, throwing into doubt whether the Canadian company will proceed with a sale of its stake.
... Dispatch continues below ...
Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life
Company Press Release
VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.
The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.
The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:
Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day
Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."
For the complete press release, please visit:
http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...
According to people familiar with the matter, Barrick has been working with UBS to consider its options for African Barrick, which the Canadian miner, the largest gold producer globally, partially floated in 2010.
China Gold, which has subsidiaries listed in Hong Kong and Toronto and on Beijing's A share market, is the biggest producer of gold in China and in 2007 set a target to quadruple assets and revenues within four years.
African Barrick, Tanzania's largest gold producer, has performed poorly since being spun off from its Canadian parent in 2010, with its shares slumping about 30 per cent since listing.
An offer for Barrick's stake in African Barrick could trigger an offer for the whole of the London-listed company, people familiar with the matter said, putting the onus on its independent directors to safeguard minority owners' interests.
The UK-listed miner's shares surged more than 11 per cent to 437.6p in early trading on Thursday.
Barrick Gold recently signalled it was reining in its expansion plans and introducing a renewed focus on disciplined spending, as it announced a big cost over-run at its key development project in South America.
Jamie Sokalsky, the new Barrick chief executive, pledged that "returns will drive production; production will not drive returns" as he unveiled a review of the miner's sprawling portfolio of assets.
Since its listing in London, African Barrick has struggled to hit its production targets, as interruptions to its power supply from Tanzania’s national grid disrupted work. Reliance on expensive diesel generation has also pushed costs higher.
The African miner in July said production had fallen 14 per cent in the first half of the year, as lower grades in its mines weighed on output and increased costs.
Zijin's interest in African Barrick could prompt other gold miners to consider a tilt at the group, which has a market value of L1.6 billion. Randgold, the London-listed miner with operations in Mali, and AngloGold Ashanti, the South African miner, have previously been named as possible buyers of African Barrick.
State-controlled Zijin, which is listed in Hong Kong, is the largest gold producer and second largest copper producer in China, and also has operations in zinc, tungsten and iron ore.
The Chinese group has, thus far, had a limited profile on the world stage. In August, Zijin said it had bought more than 50 per cent of Norton Gold Fields, an Australian company, calling the move “the first successful example for Chinese enterprise to take over large-sized gold mine in production”.
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