barrick opens process to sell some assets

Article in the west australian newspaper today. Grannys may be up for sale.

Barrick eyes WA asset sale

Barrick Gold has begun the process of selling the jewels of its WA assets, appointing corporate advisers to manage the sale of its South Yilgarn operations.

While Barrick would not comment on the appointment yesterday, the company is understood to have hired UBS and Merrill Lynch to help find a buyer for its Granny Smith, Lawler and Darlot mines, which collectively produced 452,000 ounces of gold in 2012.

It is understood Barrick's half-share of the Kalgoorlie Super Pit is not for sale, and while the company is open to offers for its ageing Kanowna and Plutonic mines, they are not part of the UBS and Merrill mandate.

With gold stocks still in freefall after a disastrous week on commodity markets, Barrick has picked a bad time to try to offload its WA mines. But with mineral reserves of almost 2.6 million ounces of gold at the group, sources say a sale could still fetch more than $1 billion, provided prices hold up.

Barrick upped production in 2012 by 22 per cent from 2011, with an average cash cost of production of $768/oz.

After the January failure of a $2.3 billion move to sell its majority stake in African Barrick Gold to China Inc, the world's number one gold producer has been under pressure to reduce debt.

This week, ratings agency Moody's warned of a possible downgrade to Barrick's debt when the company stopped work on its $US8.5 billion gold mine in the Andes mountains after a brawl with Chilean authorities over allegations of environmental damage in the sensitive region.

In February, Barrick took a $3.8 billion charge to its accounts from the writedown in value of its Lumwana copper mine in Zambia, the legacy of 2011's $US7.3 billion acquisition of Equinox Minerals.
Barrick shares have nearly halved this year and the company made no secret that it was considering asset sales, putting its energy unit on the market in February.