August 16, 2012 - 8:01 AM
TORONTO - Barrick Gold Inc. (TSX:ABX) is holding talks that could result in the sale of its majority stake in spinoff African Barrick Gold to China's largest gold producer.
The discussions between Barrick, the world's largest gold producer, and China National Gold Group Corp. are at an early stage and there is no guarantee they will result in the sale of any or all of its 74 per cent stake in ABG, the Toronto-based concern said in a release.
Still, the news sent African Barrick stock up almost 10 per cent in trading on the London Stock Exchange at midday local time.
In New York, parent Barrick Gold stock was up 55 cents, or 1.61 per cent, at $34.69 in premarket trading.
ABG is Tanzania’s largest gold producer and one of the five largest gold producers in Africa, but production costs have been higher than anticipated, Barrick Gold said in its recent second-quarter financial report.
Barrick Gold and ABG said in separate releases that if China Gold decides to acquire more than 30 per cent of the voting interest in ABG, it would be required to make an offer for a full takeover.
The Canadian company says the negotiations are in line with "a renewed focus on maximizing shareholder value" adopted in its second-quarter financial report.
That focus "includes optimizing Barrick's portfolio of assets and maximizing returns on investment and free cash flow."
"The preliminary discussions relating to ABG form part of this program," it said, adding that "Barrick remains both committed to and confident in ABG, its qualified and experienced management team and its portfolio of world-class assets."
News from © The Canadian Press, 2012