Barrick Gold eyes part sale of Pascua-Lama mine
31 October 2013
Barrick Gold, the world's largest gold producer, is exploring several options to raise cash, including a strategic equity investment and even a part sale of its Pascua-Lama mine in order to reduce debt.
Citing people with knowledge of the matter, Bloomberg today reported that the Toronto-based miner has examined the sale of part of its $8.5-billion Pascua-Lama mine on the Argentina-Chile border.
Barrick has yet to settle on any options, and there's no certainty a deal will occur, the report said.
The move comes four months after Barrick took a $5.5-billion writedown on its Pascua-Lama project in the Andes amid delays, skyrocketing expenses and crash of gold prices.
Several global mining majors have taken billions of dollars in impairment charges recently due to a fall in commodity prices and escalating production costs as a result of the continuing European debt crisis and fragile global economy.
"Rising costs, poor capital allocation and the pursuit of production growth at any cost in the industry have led to declining equity valuations across the sector," Barrick's president and chief executive officer Jamie Sokalsky had earlier said.
Bogged down with long-term debt of $14.4 billion, Barrick has sold some mines and said in June that it will reduce capital expenditures at Pascua-Lama in 2013 and 2014 by $1.5-$1.8 billion.
Early this year, Barrick was fined $12 million by the Chilean government for alleged breaches in environmental standards at the mine.
Pascua-Lama is one of the world's largest gold and silver mine with nearly 18 million ounces of proven and probable gold reserves1, 676 million ounces of silver contained within the gold reserves1, and an expected mine life of 25 years.
When complete, Pascua-Lama will be one of the world's low-cost gold mines, producing an average of 800,000-850,000 ounces of gold per year in its first full five years of production.
Barrick is the world's largest gold mining company with four business units located in Australia, Africa, North America and South America. The company also has investments in copper mines in Zambia and Chile.
The company currently has a market cap of $20.52 billion, although its value has fallen by around 41 per cent this year.