Barrick Gold Corp. Chief Executive Officer Jamie Sokalsky said talks about a sale of the company’s majority stake in its African unit to China National Gold Group Corp. are still at “very early” stage.
Barrick, the world’s largest gold producer, reported the discussions with the state-owned Chinese company last month. Toronto-based Barrick’s 74 percent holding in African Barrick Gold Plc is valued at about 1.43 billion pounds ($2.29 billion), based on African Barrick’s closing share price in London yesterday.
“There is nothing that I can really say that would give any more clarity to how this may proceed,” Sokalsky said yesterday in an interview in Denver, where he’s attending the Denver Gold Forum.
A sale of the African Barrick stake would be Barrick’s biggest divestment, after it spent more than $28 billion over 18 years on acquisitions. Sokalsky, 55, who took over as CEO in June following the firing of his predecessor Aaron Regent, is reviewing Barrick’s assets in an effort to improve returns and cash flow as mining costs rise.
“There are many things that we can do to improve the quality of the portfolio,” he said. “This isn’t just about selling assets -- this is about making further high-return investments to ultimately improve current operations as well.”
Barrick is among precious-metals producers grappling with rising operational and development expenses. The company said in July that its Pascua-Lama mine project on the border between Chile and Argentina may cost $8 billion, as much as 60 percent more than previously estimated.
The company’s asset review, which it announced in July, “can involve making additional investments in some assets,” Sokalsky said. “It could mean not making any investments or looking to potentially monetize them if these assets are worth more in the hands of someone else than Barrick.”
Sokalsky said he’s “optimistic” the gold price will rise to a record $2,000 an ounce within the next 12 months.
“I’m very optimistic that we are seeing the beginnings of a new rally in the gold price,” he said. “The factors in place that would be very supportive for gold to go higher are there.”
Gold for delivery in December dropped 0.5 percent to $1,731.80 on the Comex in New York yesterday. Gold futures rose to a record $1,923.70 on Sept. 6, 2011.