Barrick ends talks to sell African unit to Chinese buyer

05:32 EST Tuesday, Jan 08, 2013
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LONDON — Barrick Gold Corp. said it was no longer in talks to sell a stake in its majority-owned, London-listed gold producer African Barrick Gold to a Chinese buyer, calling time on months of talks.

The Canadian mining company, which owns 74 per cent of African Barrick, said in August it was in early-stage talks with state-owned China National Gold about the possible sale of all or part of its stake.

The termination of talks over what would have been one of China’s largest mining deals in Africa suggests that China is becoming an increasingly tough negotiating partner.

Chinese companies made a string of deals in gold miners in 2012 as the country’s demand for bullion, where it is sought for jewellery and as an inflation hedge, soars, and it has been increasingly seen as a deep-pocketed investor.

“We are approaching this in a prudent and disciplined manner and will only proceed with opportunities that generate acceptable value for Barrick,” Barrick Gold’s chief executive officer Jamie Sokalsky said in a statement on Tuesday.

Barrick, the world’s largest gold producer, has said it is evaluating all of its portfolio as it grapples with falling profits and soaring costs.

African Barrick said in a separate statement on Tuesday that its board had asked management to conduct an operational review of the business with the intention of improving returns from its projects, which are primarily based in Tanzania.

Since it was listed separately in London in 2010, African Barrick has lagged expectations, suffering setbacks ranging from villagers armed with machetes invading a mine to power woes and fuel thefts.

The board of the London-listed firm said it intended to recommend that its full-year dividend be maintained at the 2011 level of $67-million.

Other Chinese investments in gold have primarily been in Australia. In the last six months, Zhongrun Resources Investment Corp. agreed to buy a stake in Noble Mineral Resources Ltd., Shandong Gold Group greed to buy part of Focus Minerals Ltd., and Zijin Mining Group acquired Norton Gold Fields.