$150m of goldmines for sale Jamie Freed November 6, 2006
AUSTRALIAN, Canadian and South African gold companies are competing to purchase more than $150 million of gold assets up for grabs in Western Australia.
The world's largest goldminer, Canada's Barrick Gold, is selling its Paddington operations, which include the low-grade Red Hill open pit mine, a large mill, some smaller gold deposits and thousands of square kilometres of exploration ground near Kalgoorlie.
The Paddington package, which one source estimated could be worth about $100 million, would allow the buyer to produce more than 100,000 ounces of gold a year in the near term.
Additionally, Croesus Mining, which collapsed into administration over poor hedging contracts earlier this year, is finalising the sale of its Norseman operations.
It is expected to get at least $60 million for the assets, which are capable of producing more than 100,000 ounces a year.
In its quarterly report released on Friday, Barrick said its board had agreed to the sale of its Paddington operations in October and was "in negotiations with certain interested parties".
It is believed that St Barbara, Crescent Gold, Leviathan Resources, Dioro Exploration, South Africa's Harmony Gold and Canada's GBS Gold have all expressed interest in the Paddington assets.
Dioro managing director Rhod Grivas confirmed his company's interest but said it did not make Barrick's short list. And Victorian gold producer Leviathan is probably out of the running after it agreed to a merger with fellow Victorian producer Perseverance Corp in October.
St Barbara, which bought the gold assets of failed miner Sons of Gwalia, last week said it was hunting for acquisitions to help it increase production to 1 million ounces a year by 2010.
Fat Prophets analyst Gavin Wendt said Barrick's Paddington operations would be a good fit for St Barbara. But he added Harmony would also see the purchase as an excellent way to increase its footprint in the Kalgoorlie region.
As for the other potential bidders, Crescent specialises in low-grade deposits similar to the 2 gram per tonne Red Hill mine which comes as part of the Paddington package. And although GBS is based in Vancouver, its production comes from the Northern Territory and it holds exploration ground in WA.
Mark Fisher, the mine general manager of Barrick's Kanowna operations, including the Paddington assets, said his company was concluding discussions with a number of buyers and hoped to finalise the sale by the end of the year.
"It would give someone immediate cash flow, because it's being sold as a going concern," he said. "We believe there is opportunity to keep [the 3 million tonne a year] plant full for some period of time."
Barrick is selling the Paddington assets to focus on higher-grade deposits at Kanowna. It acquired the operations through its purchase of Placer Dome.
Administrators for Croesus are believed to be close to finalising the sale of the Norseman assets, which were purchased from WMC Resources for $75 million in 2002.
Industry sources said the front-runner appeared to be Avoca Resources, which could use the Norseman plant to process gold from the mine it is developing at Higginsville.
