All amounts expressed in US dollars unless otherwise indicated.
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX)today announced it has agreed to divest its Yilgarn South assets in Western Australia to Gold Fields Limited.
The Yilgarn South assets are comprised principally of the Granny Smith, Lawlers and Darlot mines. In aggregate, these mines produced 452,000 ounces in 2012 at all-in sustaining costs (AISC) of $1,137 per ounce(1) and 196,000 ounces in the first half of 2013 at AISC of $1,145 per ounce. Yilgarn South contained proven and probable reserves of 2.6 million ounces(2), measured and indicated resources of 0.6 million ounces(2) and inferred resources of 1.2 million ounces(2) as at December 31, 2012.
Barrick will receive total consideration of $300 million for the sale of Yilgarn South, subject to certain closing adjustments. The agreement is subject to customary closing conditions, including approval by Australia’s Foreign Investment Review Board, consent of the Western Australian Minister for Mines for the transfer of the property tenements, and the assignment of certain supply contracts.
Gold Fields will have the option to deliver up to 50 percent of the consideration in its own common shares to Barrick in lieu of the equivalent amount of cash consideration at closing. The shares would be priced based on the five day volume weighted average price, prior to, but not including closing. There are no contractual hold restrictions on the disposition of the shares. The transaction is expected to close on October 1, 2013. Proceeds will be used for general corporate purposes, including debt repayment, and will be recorded in the fourth quarter of 2013.
“The agreement to divest Yilgarn South demonstrates further progress as we work to optimize the company’s portfolio and maximize free cash flow in line with our disciplined approach to capital allocation,” said Jamie Sokalsky, Barrick’s President and CEO. “I’d like to extend my gratitude and appreciation to our Yilgarn South employees, who have made a significant contribution to Barrick over many years.”
Barrick maintains its 2013 gold production guidance of 7.0-7.4 million ounces at AISC of $900-$975 per ounce, which are the lowest costs of its senior peer group.
UBS Securities Canada Inc. and BofA Merrill Lynch are acting as financial advisors to Barrick with respect to the transaction. Clayton Utz is acting as legal counsel to Barrick.
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