Gold miner Barrick Gold Corporation (ABX) announced that it plans to sell about 13.5% of its share held indirectly in African Barrick Gold plc (“ABG”). The sale of the 41 million African Barrick shares will represent about 10% of its issued ordinary share capital.
The shares will be sold to institutional investors and Barrick has appointed UBS Ltd., J.P. Morgan Securities plc and RBC Europe Ltd. to act as joint book runners in the deal.
Barrick Gold released its fourth-quarter 2013 results last month. Attributable production of African Barrick in the fourth quarter was 0.12 million ounces compared with 0.13 million ounces in the year-ago quarter. Attributable production for 2014 is expected to be 0.480–0.510 million ounces.
Barrick Gold’s adjusted earnings (excluding one-time items) for the fourth quarter dropped to 37 cents per share from $1.16 in the year-ago quarter. Lower realized gold and copper prices and a decline in gold and copper sales volumes led to the decline in earnings.
On a reported basis, net loss in the fourth quarter was $2.83 billion or $2.61 per share compared with a net loss of $3.01 billion or $3.01 per share in the prior-year quarter. The loss includes $2.82 billion in impairment charges including $896 million at Pascua-Lama after construction was suspended and $595 million at Porgera with a decrease in the mine life to 9 years from 13 years.
Revenues fell around 29.5% year over year to $2,926 million in the reported quarter. Average realized price of gold decreased 25.8% year over year to $1,272 per ounce. All-in costs declined 8.1% to $1,317 per ounce while all-in sustaining costs fell roughly 14.2% to $899 per ounce in the reported quarter.
For 2014, Barrick Gold expects gold production in the range of 6–6.5 million ounces. The lower production in 2014 indicates the company’s strategy to maximize free cash flow and returns over ounces, the sale of high-cost, short-life mines, lower production from Cortez, and its move to close Pierina.
Currently, Barrick Gold retains a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the gold mining industry include AngloGold Ashanti Ltd. (AU), NovaGold Resources Inc. (NG) and Richmont Mines Inc. (RIC). While AngloGold carries a Zacks Rank #1 (Strong Buy), NovaGold and Richmont Mines retain a Zacks Rank #2 (Buy).
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