AUSTRALIA – Toronto's Barrick Gold is selling three of its producing mines in Australia to Gold Fields of Johannesburg, South Africa. The Darlot, Granny Smith and Lawlers mines – Barrick's Yilgarn South assets – for US$300 million in cash and shares.
The three mines produced 452,000 oz of gold in 2012 at all-in sustaining costs of US$,137 per oz, but this year ounces are down and costs are up. In the fist six months of 2013, their combined output was 196,000 oz at AISC of US$1,145 per oz.
Gold Fields has the option to issue its own common shares for up to half the sale price. The shares will be priced on the five day volume weighted average price, before (but not including) closing, which is expected on Oct. 1, 2013, subject to the usual regulatory approvals and certain closing adjustments. Barrick will use the proceeds to repay debt and for general corporate purposes in Q4 2013.
This is not the first time Gold Fields has loosened its purse strings for a Barrick asset. In 2006 the company bought Barrick's 50% interest in the South Deep gold mine in South Africa for US$1.53 billion, mostly in shares. Gold Fields eventually picked up the other half from Barrick's partner, Western Areas. South Deeps is scheduled to reach full commercial production, 700,000 oz of gold annually, by 2016 and maintain that rate until 2057, eventually exhausting its resources in 2080.
Gold Fields also operates the Agnew and St. Ives gold mines in Australia. When the three Yilgarn South mines are added to its portfolio, 42% of the company's gold production will come from Australia.
Barrick will continue to operate its Cowal (100%), Kalgoorlie (50% with Newmont Mining), Kanowna (100%) and Plutonic (100%) gold mines in Australia. In 2012 Barrick's share of the output from the four properties was 935,000 oz of gold. The company is maintaining its 2013 guidance of 7.0 million to 7.4 million oz.
Barrick's disappointments at the Pascua-Lama project that straddles the Argentina-Chile border and its need for cash are well known to CMJ readers. Whether or not the sale of the Yilgarn South assets will mark a turnaround for the former world's largest gold miner remains to be seen.
Learn more at Barrick.com.
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