TORONTO (miningweekly.com) – Mining giant Barrick Gold is spinning off its African gold assets into a new London-listed company that will be more flexible to seize on opportunities available in the African gold sector, CEO Aaron Regent said on Thursday.

African Barrick Gold, which will be one of the five biggest gold producers on the continent and the largest on the LSE, will start off with four mines – all in Tanzania – some exploration properties and $280-million in the bank.

Barrick is hoping that the transaction will help unlock value in the Tanzanian assets, which produced around 10% of the group's gold output in 2009.

The spun-off company also will be in a position to consider smaller-scale projects that may not be big enough to tip the scales for Barrick, Regent said on a conference call.

Although securities laws prevent the company from going into too much detail at this point, Regent hinted that there are already some opportunities in Africa being considered by the African Barrick team.

"We think there's lots of potential in Africa," he said.

“We think it is a unique business environment and so we are creating a structure that is very customised to the continent and to the opportunities that are out there.”

Projects that are small at a Barrick level could have an meaningful impact on the profile of the new company, he reiterated.

“And so we wanted to ensure that it had lots of flexibility to pursue those options.”

Regent remained tight-lipped on just what those options could turn out to be, but said African Barrick should have some answers ready at an investor roadshow that will begin in early March.

He did reveal that the two companies have agreed on a 'non-compete' arrangement, in which African Barrick will have first option on opportunities that arise in Africa, but will not venture off the continent to compete with its parent elsewhere in the world.

APPETITE FOR AFRICAN GOLD

The initial public offering (IPO) of shares in the new firm is expected to be completed by the end of March, Regent said.

Barrick plans to sell about 25% of African Barrick in an IPO, and will retain the other 75%.

Spokesperson Vince Borg said the company has no plans to reduce its holding beyond that point.

“We're committed to the company and we're content with the 75%,” he told Mining Weekly Online.

The LSE was settled on for a listing because investors in that market have an “appetite” for quality African gold producers, Borg said.

“There is a scarcity of high-quality gold producers on the exchange there right now. And this [African Barrick] would be the largest producer.”

The new company will produce more gold than either LSE-listed Petropavlovsk, which mines gold in Russia, or Randgold Resources, which has assets in Mali, Senegal, the Côte d’Ivoire and the Democratic Republic of Congo.

African Barrick is expected to produce between 800 000 oz and 850 000 oz in 2010 and had total reserves of 16,8-million ounces at the end of last year.

Looking ahead, it aims to boost production to over one-million ounces a year by 2014 and to double its production in the next ten years.

The company will be led by Greg Hawkins, who was previously CFO of Barrick's Australia Pacific unit, and Regent will serve as chairperson of the board, which includes former AngloGold Ashanti CEO Bobby Godsell as an independent nonexecutive director.

The balance of the African Barrick IPO proceeds will be returned to Barrick, but Regent emphasised that the spin-off was not driven by a need to raise funds for the larger firm.

The plan is for African Barrick to eventually list shares on the Dar es Salaam Stock Exchange in Tanzania as well, which will boost its profile in the country and allow for local participation, he added.

Shares in Barrick Gold, which reported fourth-quarter adjusted net income of $604-million earlier in the day, rose 3,3% on Thursday, to C$40,96 apiece by 15:30 in Toronto.

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