China Molybdenum Co. has emerged as the frontrunner in Barrick Gold Corp.’s sale of a stake in its Zaldivar copper mine, and is pushing to buy the entire asset from the company, people with knowledge of the matter said.
While Toronto-based Barrick has said it wants to sell half the mine to form a joint venture, China Molybdenum is interested in buying the whole if it can agree on a price that would convince Barrick to part with the mine, said the people, who asked not to be identified because the information is private. The copper mine may be valued at more than $2 billion, people familiar with the situation have said.
Under Chairman John Thornton, Barrick is trying to slim the company down to focus on fewer assets, after it was hit by the plunging gold price and forced to write down the value of its acquisition of Equinox Minerals Ltd.
Other players, including BHP Billiton Ltd., remain in the running, the people said. Some of the suitors that submitted bids in the second round have dropped out, the people said. BHP’s interest has cooled somewhat as the valuation continued to climb, two of the people said.
Talks are ongoing and there’s no guarantee China Molybdenum will reach an agreement for the entire mine. A final decision may come in the next week, two people said.
A spokesman for Barrick declined to comment. A media official for Luoyang, China-based China Molybdenum declined to comment as did a representative for Melbourne-based BHP.
China Molybdenum said in a July 6 statement that it was bidding for some mining assets of an international mining company -- without naming the target -- and that the investment’s value won’t exceed $2.15 billion.
A sale of all or part of Zaldivar would be the latest divestiture in 2015 for Barrick as it looks to pay down at least $3 billion of debt by the end of this year.
In May, Barrick announced the sale of a 50 percent stake in its Porgera mine in Papua New Guinea to China’s Zijin Mining Group Co. Ltd. for $298 million. That deal came a few days after Barrick sold its Australian Cowal mine to Evolution Mining Ltd. for $550 million.
Zaldivar, in northern Chile, produced 222 million pounds of copper in 2014, according to Barrick’s website. Proven and probable copper reserves from the mine as of December 2014 were 5.56 billion pounds.