Barrick Gold to sell three Australian mines

The world's biggest gold producer, Barrick Gold, is planning to sell three of its Australian gold mines, as part its strategy to sell assets in order to increase shareholder value, The Australian today reported, citing a person familiar with the matter.

The paper said that the Canadian miner is looking to sell its Yilgarn South division in central Western Australia, including the Darlot, Granny Smith and Lawlers mines.

The mines produced 452,000 troy ounces of gold last year at a cost of $768 an ounce and have combined reserves of 2.59 million ounces.

Toronto-based Barrick, which in February reported a net loss of $3.1 billion in the fourth quarter due to a massive write-down of $4.2 billion on its Zambian copper mine, has hired Bank of America Merrill Lynch and UBS to manage the sale.

Barrick's president and chief executive officer Jamie Sokalsky had earlier said, "Investors are rightfully demanding fundamental change in the gold industry, and Barrick is driving this new paradigm."

Under new plans, the company will not build any new mines or proceed with the expansion plans that were previously under consideration, intends to spend only minimum capital to maintain its potential assets and sell non-core assets in order to increase shareholder value.

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, Sokalsky had said.

Barrick highlighted the need for change last year and is increasingly taking strong action and re-focusing its business based on the principle that returns will drive production, production will not drive returns.

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.

Early this year, Anglo American announced that it would take an impairment charge of $4 billion related to its Brazilian iron ore operations, while Rio Tinto took a $14-billion write-down due to a slump in its aluminium and coal businesses.

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.