Barrick to launch African spinoff

Toronto-based mining company Barrick Gold Corp. announced plans on Thursday to spin off some of its operations into a new publicly traded firm called African Barrick Gold.

Barrick would own 75 per cent of the new company, with the remaining shares traded on the London Stock Exchange.

"African Barrick's growth options and its ability to finance those options will be expanded," CEO Aaron Regent told analysts during a conference call. 

"Projects that are small at a Barrick level could have a meaningful impact on the profile of this company, and capital can be allocated accordingly," he said.

 "In addition, the return on this capital to Barrick will also provide increased financial capacity to fund Barrick's significant pipeline of projects," he added.

In another transaction announced Thursday, Barrick said it will increase its stake in a Chilean gold and copper mine by purchasing 25 per cent from Kinross Gold Corp. in a deal valued at $475 million US.

Barrick said it will pay $455 million cash and eliminate a $20-million obligation that Kinross had to Barrick. The deal will raise Barrick's share of the Cerro Casale operation to 75 per cent.

The company estimates that its share of Cerro Casale's production in the first five years of operation will be 750,000 to 825,000 ounces of gold and 170 million to 190 million pounds of copper.

Reserves increased by 5.8-million ounces

"This acquisition will increase our gold reserves by 5.8-million ounces and our copper contained within gold reserves by 1.4-billion pounds," Regent said. 

He added that construction of the Cerro Casale project will take about three years after key permits are received, and Barrick should be able to realize synergies with its Pascua-Lama project nearby.

The two announcements came as Barrick, the world's largest gold producer, announced net income of $215 US million, or 22 cents per share, in the fourth quarter. In the same period a year earlier, it reported a loss of $468 million, or 54 cents per share.

Sales rose almost 13 per cent to $2.358 billion. Barrick produced 1.9-million ounces of gold in the quarter, with about 11 per cent of it coming from the company's African operations.