 TORONTO (miningweekly.com) - Barrick Gold's plan to spin-out its African assets into a new, London-listed company could be a sign of things to come, as gold majors look for ways to realise value from increasingly large and diverse portfolios, Randgold Resources CEO Mark Bristow said on Wednesday.
"Majors are struggling to deliver value as a consolidated business and they feel that by splitting up their assets in different markets they will be able to create more value," he said after a presentation to analysts and investors in Toronto.
"Particularly in gold, there is very little synergy. And maybe that's the start of the industry right-sizing down to more appropriate business units," Bristow said.
"If that's the case, I think it's very good for the industry."
Bristow said he is interested to see how the market values the assets of the new company, African Barrick Gold, which is expected to list on the LSE later this month.
"We've always delighted in competition. And quite frankly, there's no real competition within the London markets," he commented.
Randgold Resources and Russia's Petropavlovsk are currently the only large gold producers listed in London.
"I think it's going to be very interesting for us to see those assets valued by the market," Bristow said.
Randgold Resources has primary listings in both New York and London.
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 has said the smaller firm will be able to take advantage of projects that are too small for the Toronto-based gold major, and Barrick CEO Aaron Regent said last month that he does not plan to repeat the process in other regions where the company operates.
However, Mark Cutifani, the CEO of AngloGold Ashanti, has said he will consider 'portfolio restructuring' to unlock value in the group's assets.
GOLD 'RELATIVELY FLAT'
Bristow, in town for the Prospectors and Developers Association of Canada convention, said he expects the gold price will stay "relatively flat" this year, but will start rising again in 2011.
He expects the yellow metal will trade between $1 000/oz and $1 200/oz in 2010.
It might peak above $1 200/oz "momentarily", Bristow said.
"The major economic countries of the world and their politicians are going to spend an enormous amount of energy and taxpayers' money trying to prove to everyone that their stimulus packages are right.
"But ultimately, the need for the world to reorganise and mark itself to market will prove those measures as desperate.
"And in our scenario, we see gold going higher again next year and beyond, as we really start measuring the damage."
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