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TORONTO (miningweekly.com) – Senior gold producer Barrick Gold on Tuesday reported that it had completed a sale of 41-million shares in African Barrick Gold (ABG), raising about $188-million.
The stock represented about 10% of the total issued shares of ABG, and was sold at £2.75 apiece in London, UK, in a transaction announced on Monday.
“This is a positive step by Barrick which significantly increases our free float. The placing is a reflection of the increased interest in the business as a result of the progress we are making as we continue to drive improved operational delivery from our high quality asset base,” ABG CEO Brad Gordon said.
Barrick president and CEO Jamie Sokalsky agreed, adding that ABG had made excellent progress with its operational review to increase production and reduce operating and capital costs, and the results to date had been favourably received by the market.
“Barrick continues to support ABG management as they advance the operational turnaround and make other efforts to improve the business. After this transaction, Barrick will still be a controlling shareholder, but this transaction allows us to realise some liquidity from our holding in ABG in keeping with our disciplined capital allocation framework and our ongoing programme to optimise and lower the average cost of our portfolio,” Sokalsky said.
Barrick continues to hold about 262-million ordinary shares of ABG, representing about 64% of the issued ordinary share capital of ABG.
Barrick is bound by a lock-up agreement to not sell any more ABG shares without the consent of the joint bookrunners for a period of 120 days, except that consent shall not be required in the event of an offer for the entire issued share capital of ABG, or if a single corporate or strategic purchaser as part of a single transaction bought 10% to 20% of Barrick's remaining ABG shares – provided that such a purchaser agrees to be bound by an equivalent restriction for the remainder of the lock-up period.
Toronto-based Barrick had unsuccessfully tried to sell ABG to State-owned China National Gold Group, in 2012, but that deal fell apart in January 2013.
ABG was one of many precious metal miners battling to turn a profit after gold recorded the steepest price falls in a generation last year, from which it had yet to recover. The price of gold was more than 20% lower year-on-year, prompting many producers to shelve projects, reduce overheads and put noncore assets on the block.
The miner had reported output of 641 931 oz of gold last year, beating its guidance by 7% on strong performances from its North Mara and Buzwagi mines.
ABG’s LSE-listed stock on Tuesday closed 16.45% lower at £2.57 apiece.