Barrick Super Pit Stake Sale Said to Draw Kinrossby , , and
China National Gold, Shandong also studying Super Pit stake
Suitors review mine data ahead of bid deadline at end-October
Barrick Gold Corp.’s stake in the Kalgoorlie Super Pit mine has drawn interest from Kinross Gold Corp. and Zijin Mining Group Co. in a sale that could fetch as much as $1 billion, people with knowledge of the matter said.
Australian producers Newcrest Mining Ltd., Northern Star Resources Ltd. and Evolution Mining Ltd. are also reviewing data on the mine ahead of possible indicative bids, which are due by the end of October, according to the people. Chinese companies including China National Gold Group Corp. and Shandong Gold Mining Co. are also considering offers, the people said, asking not to be identified because the details are private.
Gold producers have been reining in costs and selling assets after prices dropped for three straight years. Barrick, the world’s largest gold miner, continues to seek asset disposals even as a price surge this year helped spur its highest profit since 2013.
The Toronto-based firm announced plans to sell the 50 percent stake in the mine in July and hired Credit Suisse Group AG to advise on the sale. Its joint venture partner Newmont Mining Corp., the mine’s operator, has signaled it would be willing to buy the stake at the right price. Barrick President Kelvin Dushnisky said last month the company expects a competitive auction for the Super Pit and that initial indications were “very positive.”
Barrick is considering various ways to structure the sale, according to the people. One possibility involves selling shares in the holding company that owns the mine, which would not include a right of first offer for Newmont and thus would allow other buyers to potentially acquire the stake, the people said.
Newmont will “participate in the process,” and as operator of the asset it has improved the mine’s production and costs, spokesman Omar Jabara said in a mobile-phone text message. The partners in the joint venture agreed last April to changes in the site’s management under which Newmont assumed greater responsibility.
Spokesmen for Barrick, Kinross, Newcrest, Northern Star and Evolution declined to comment. Zijin, China National Gold and Shandong Gold didn’t answer calls to their offices and e-mails seeking comment during a public holiday in China.
Dealmaking in the gold industry in the quarter ended Sept. 30 was the busiest since 2010 by number of transactions, with 140 purchases being announced, according to data compiled by Bloomberg. Canada’s Centerra Gold Inc. agreed in July to purchase Thompson Creek Metals Co. in a $1.1 billion transaction, while Kirkland Lake Gold Inc. said last month it will buy Newmarket Gold Inc. in an all-stock deal valued at C$1.01 billion ($763 million).
The Barrick asset, known as the Super Pit, is 3.5 kilometers (2 miles) long and ranks as Australia’s largest open-pit gold mine, its website shows. It’s located in Kalgoorlie, a city in Western Australia where the metal has been produced continuously since a late 19th-century gold rush.
Barrick last year sold the Cowal mine in Australia to Sydney-based Evolution for $550 million and a 50 percent stake in the Porgera mine in Papua New Guinea to Zijin. The company said in July it would divest other non-core assets including the Lumwana copper mine in Zambia, a 64 percent interest in African gold producer Acacia Mining Plc and its remaining holding in Zaldivar.
Gold bullion for immediate delivery has risen 18 percent this year to $1,255 an ounce as demand for the metal as a store of value climbed on global economic-growth concerns. The metal fell this week to the lowest in almost four months after U.S. jobs data strengthened the case for an increase in interest rates in December.