Barrick Gold has been trying to unwind some of this excess debt in recent months, which is an ongoing process. Accordingly, yesterday the company announced the sale of its one third interest in a small gold mine in Nevada, the “Marigold Mine” for cash consideration of US$86 million, based on a total mine valuation of US$275 million which also saw the majority owner Goldcorp sell as well, as part of the same transaction.
The proceeds to Barrick were adjusted slightly, with Goldcorp receiving proceeds of US$189 million for their two thirds stake, to reflect Goldcorp’s position as manager and majority owner of the joint venture. The purchaser is Silver Standard Resources Inc. and the deal should close in the second quarter of 2014.
Barrick’s share of production in 2013 was about 55, 000 ounces of gold at all-in sustaining costs of about US$1, 545 per ounce. Barrick’s share of proven and probable reserves at December 31, 2012 was 1.6 million ounces, and its share of measured and indicated resources and inferred resources was 0.2 million ounces and 0.4 million ounces, respectively.
With the spot gold price currently around US1, 250 per ounce, the onus on the purchaser will now be to operate the mine on a more economical operating cost basis. Small mining companies can frequently do that job better than the large integrated companies, for some reason.
With this latest transaction Barrick has now picked up about US$936 million in the last six months from non-core asset divestitures. By the time Peter Munk retires as Chairman of the Board at the Annual General Meeting due to take place on April 30th, 2014, therefore, the company should be well on the way back to good health, something which is obviously very important to him personally.
After hitting a low last July of below US$14 per share the shares have crept back up 33% to their current price of about US$19 since; and, mostly in the last couple of months as the new directions for Barrick have started to take shape.