TORONTO (Reuters) - 18/02/10 "Barrick Gold Corp (ABX.TO) said on Thursday it will spin off its African gold assets into a new publicly traded company.
Barrick announced the moves as it unveiled a doubling of fourth-quarter operating profit, driven by gold prices that soared to record levels in the final three months of 2009.
The new company, to be called African Barrick Gold (ABG), will list on the London Stock Exchange and will hold Barrick's African gold mines and exploration properties. Barrick plans to retain a 75 percent interest in ABG initially.
ABG also intends to seek a future listing on the Dar es Salaam Stock Exchange in Tanzania.
Barrick, the world's top gold producer, operates four African mines, all in Tanzania.
ABG is expected to produce 800,000 to 850,000 ounces of gold in 2010, with total reserves of 16.8 million ounces as of December 31.
"Size-wise it's bigger than (mid-tier miner) Randgold Resources (RRS.L) and certainly it would be... one of the prime gold listings on the LSE," said Leon Esterhuizen, an analyst at RBC Capital Markets in London.
Due to the spinoff, Barrick trimmed its 2010 production forecast to a range of 7.6 million to 8.0 million ounces from its previous estimate of 7.7 million to 8.1 million ounces.
Barrick said it plans to use proceeds from the ABG spinoff to fund its pipeline of development projects.
PROFIT RISES, TOPS ESTIMATES
Excluding a $241 million charge related to the hedge book buyout and other one-time items, fourth-quarter earnings rose to $604 million, or 61 cents a share, from $277 million, or 32 cents a share, a year earlier.
Analysts polled by Thomson Reuters I/B/E/S had expected, on average, 57 cents a share.
On a net basis, Barrick earned $215 million, or 21 cents a share, compared with a year-earlier loss of $468 million, or 53 cents a share.
Revenue jumped 13 percent to $2.36 billion.
Average realized gold prices in the quarter were $1,119 per ounce, up from $809 a year earlier, as the metal charged to a record price above $1,200 an ounce in the final months of the year. This offset the impact of a 17 percent drop, to 1.8 million ounces, in the amount of gold Barrick sold .
Total cash costs per ounce, which Barrick expects to come down as it opens new lower-cost mines, were little changed at $474.
Barrick expects 2010 gold production costs in a range of $425 to $455 per ounce. In 2009 it produced 7.42 million ounces at a total cash cost of $466 per ounce."
($1=$1.04 Canadian)
The deal, arranged by J.P. Morgan (JPM.N) and Morgan Stanley (MS.N), will run a bookbuilding between March 5 and March 18.

cynic

Heard anything from TFC ?

Short this with all u can

currently in Rio on biz ..... no, not heard a peep ... wonder what has happened to him and ditto tabby

Citigroup note:
When is a Super Tax not a Super Tax? Tanzanias parliament yesterday approved a 5-year development plan backing the proposed introduction of a super-profit tax on mining companies. On Sunday, the country's mining minister clarified that Tanzania would not impose the new tax (no details provided) on existing companies but would negotiate with the companies to have them pay voluntarily. Both Anglogold and African Barrick have recently argued that their tax agreements with the state are watertight and should not be subject to the super tax

The government seems to have acknowledged this and said it wont impose a super tax but will enter into discussions with miners about a voluntary tax payment. The government statement said, "We will not impose the proposed super profit tax on existing mining companies. If implemented, we will have to negotiate it with the companies because they already have agreements in place with the government." There is much confusion.

Our estimated NPV (10% WACC, gold declining to $950 over the next few years) for ABG is 4.14 and ABG is currently trading at 3.99, well below its IPO price 14 months ago of 5.75 (when gold was trading at $1350, not todays $1520). This process of consultation between the government and the miners is likely to drag on and until then ABG will likely trade at a discount to the 1.5x P/NPV that we think it deserves. However, a discount to NPV seems excessive to us, even in the light of the tax.

Buy ABG at 454p... very cheap now.

Selftrade have a 705p price target, which looks a bit optimistic, imo.

.

Nows the time to get on board ABG as it falls back a little, wont last. Itl be well up by the days end. P/E of just over 10 to 2012, totaly barmy.

Full Broker backing....

African Barrick Gold PLC

FORECASTS 2011 2012
Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

SG Securities
27-07-11 BUY 42.03 5.86 65.98 6.71
Westhouse Securities
27-07-11 ACCU 275.80 42.60 11.30 306.30 49.70 9.70
Broker Name Withheld 3
26-07-11 BUY 226.62 39.55 3.38 300.93 52.88 3.38
Numis Securities Ltd
26-07-11 BUY 241.36 39.92 4.30 289.87 49.13 5.53
Canaccord Genuity Ltd
25-07-11 BUY
Edison Investment Research
11-07-11 None 229.58 38.94 242.50 41.14
Charles Stanley
08-03-11 HOLD

2011 2012
Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)
Consensus 244.07 40.68 6.22 287.04 52.20 6.33

1 Month Change 8.62 -2.04 3.00 23.01 3.70 2.60
3 Month Change 0.43 -3.06 2.62 14.16 2.40 2.31


GROWTH
2010 (A) 2011 (E) 2012 (E)
Norm. EPS 281.53% 15.97% 28.33%
DPS % 503.40% 1.92%

INVESTMENT RATIOS
2010 (A) 2011 (E) 2012 (E)

EBITDA 199.39m 314.39m 402.19m
EBIT 199.39m 239.45m 320.33m
Dividend Yield 0.19% 1.16% 1.18%
Dividend Cover 34.05x 6.54x 8.24x
PER 15.31x 13.20x 10.29x
PEG 0.05f 0.83f 0.36f
Net Asset Value PS 351.18p 411.90p 471.55p

Hemscott Premium

Morgan Stanley note:
"Gold producers to benefit the most: We increase our PTs for both African Barrick Gold (OW) and Randgold (UW) by around 30% to reflect the significant uplift in gold price forecasts. We expect earnings to grow by >95%, thus projecting both companies to deliver sector-leading earnings growth in 2012. While both would benefit from higher gold prices, ABG remains our relative top pick on valuation and operating leverage."

Dan Coatsworth in this week's Shares Mag:
"THE GOLD PRICE sell-off witnessed in September may be shortlived,which makes miner African Barrick Gold (ABG) a solid buy at 522p. Gold has fallen three places down the commodity ranking (see Top 10 commodity movers chart, page 10) because the US decided not to print more money to stimulate its economy, instead choosing to implement its Operation Twist programme to buy long-term US government bonds, or treasuries.
Quantitative easing drives the gold price, so the absence of this action served to pull down the shiny metal, which has also been hit by three margin requirement hikes from the metals and energy exchange operator CME since August. Yet the market remains concerned Europes sovereign-debt crisis will not be resolved anytime soon and there are growing signs the US is heading back into recession. These factors should serve to remind investors about the haven appeal of gold. African Barrick should this year produce 701,000 ounces of gold and end the fiscal period with $700 million cash. Production is set to rise from 2012 and costs are expected to fall.
Shares says: The US policy fudge does not alter our bullish stance on gold, so trade it through African Barrick Gold shares at 522p.

Possibly worth a punt if & when it goes sub 500p, imo.

7th December, 2011

African Barrick Gold plc (the "Company" or "ABG")

First day of trading on the Dar es Salaam Stock Exchange

Further to the announcement made on 18th November 2011, African Barrick Gold is
pleased to confirm dealings in the ordinary shares of ABG on the Dar es Salaam
Stock Exchange will commence today. Trading will take place in the form of DSE
Depository Receipts and further information on trading mechanics can be found
in ABG's information memorandum.

StockMarketWire.com
African Barrick Gold has completed the full implementation of additional diesel generated back-up power at its Buzwagi mine.

This will provide full back-up power in the event of disruptions to grid electricity supply.

African Barrick Gold points out that, as it has previously reported, there have been significant and continual power disruptions throughout Tanzania this year, significantly reducing the expected levels of power supply.

The installed generating capacity in Tanzania amounts to approximately 1,000 MW, of which close to 50% is generated by hydropower.

As a result of the broader drought conditions experienced in East Africa this year, the availability of this hydropower has been severely limited, placing significant strain on the network and leading to regular power outages.

This has been exacerbated by maintenance work on the transmission network as well as on gas pipelines feeding the network.

StockMarketWire.com
African Barrick Gold's attributable gold production for 2011 was 688,278 ounces - with group production of 713,508 ounces, 2% lower than 2010.

Attributable gold sales totalled 699,539 ounces - with group sales of 724,574 ounces, 2% above production.

Full year total cash costs are expected to be in line with guidance of $675-$700 per ounce.

The group said the increased average realised gold price of $1,655 per ounce over the fourth quarter and $1,587 per ounce for the full year had a positive impact on cash flow and earnings, with a year-end cash position of approximately $584m.

I guess the lack of power supply has affected ABG's production.
I think fair price would be 420-440p.

18 Jan 2012 - 13:14

Jan 18 (Reuters) - African Barrick Gold PLC :

* Rbc cuts African Barrick Gold price target to 700P from 800P END

Ill take 700p any day. Nice.

..Questor share tip: Despite all its setbacks, ABG retains some lustre

By Garry White | Telegraph –

......
African Barrick Gold (ABG) has suffered a series of setbacks since it listed in London in 2010 but 2012 could be the year its fortunes start to turn.

African Barrick Gold 467.8p +0.2 Questor says HOLD

ABG was spun out of Canadian-listed producer Barrick Gold, floating at 575p a share in May 2010. The shares are now around 19pc below this.

Mining (Euronext: SMI.NX - news) in Africa is always a challenge and ABG's challenges have come thick and fast. Just two months after listing, the company was forced to cut its production guidance because of a "delay in accessing the higher-grade primary ore" at its Buzwagi mine.

Then, in October 2010, the company revealed it had uncovered an "organised and systematic" fuel theft ring at Buzwagi. It said criminal gangs had "widely infiltrated" the mine and 40pc of its mining department were suspended, hitting production further. Security has since been tightened.

The next setback for ABG was a raid at its North Mara mine in May 2011. A machete-wielding mob attacked the site in a mass attempt to steal gold. As a result, ABG unveiled plans in October last year to build a 14km wall to prevent any future incursions.

Yesterday, ABG unveiled its production reports that showed power shortages in Tanzania resulted in fourth-quarter gold production falling by 11pc year on year. Production for the full year was 688,278 oz, a 2pc fall. The company had warned of the power issues in December.

ABG is installing back-up power generation to rectify this issue, so it should have more stable production during 2012, although this could negatively impact on cash costs. Gold sales for the full year were 699,539 oz, some 2pc above production. The group also ended the year with cash balances of about $584m (£379m) and no debt.

There was no guidance on expected production and cash costs in 2012 in yesterday's statement. This will come on February 16, when the full-year results for 2011 are released. However, production is expected to be roughly flat. Production growth is expected from the end of 2013 into 2014, but the results of exploration at its Nyanzaga Project should be known in the next few weeks and that could ultimately end up with the company building a fifth mine in the country.

The shares are trading on a December 2012 earnings multiple of 7.1 times, falling to 6.7 in 2013. The prospective yield is 1.2pc.

City analysts are very upbeat about the prospects. Out of the 20 analysts covering the shares and monitored by Bloomberg, 14 have buy recommendations and six say hold. The average price target is 684p a share, almost 50pc above the current price. Investors could find this an attractive entry point.

However, Questor would rather wait until some clarity is given in a few weeks' time on 2012 prospects and results from Nyanzaga are released before assigning a buy. So, for now, hold

Drilling Success Leads to Significant Resource Expansion at Nyanzaga

3.5Moz Au Indicated and 0.6Moz Au Inferred

ABG is pleased to announce a significant uplift to the previously declared
Mineral Resource estimate for the Tusker deposit at the Nyanzaga Project. This
increases our confidence that the project, which comprises the Tusker and
Kilimani deposits, has the potential to be our next mine in Tanzania.

The updated in-pit resource is in excess of 4Moz Au, consisting of 3,481Koz at
1.47g/t Au Indicated and 598Koz at 2.05g/t Au Inferred. This represents a
fourfold increase on the previously declared resource of 313Koz Indicated and
650Koz Inferred, and is another highly encouraging step in the Company's
overall strategy of realising the potential of its existing portfolio of high
quality assets.

http://www.moneyam.com/action/news/showArticle?id=4298298

Summary note from RBC (house broker):
"Our price target of £7.00 (unchanged) reflects a 50:50 blend of 1.20x P/NAV and 6.0x P/CF, based on our 2012 estimates. We retain our Outperform rating and above Average risk qualifier. We expect a positive response from the stock on the basis of this announcement that demonstrates the growth potential in the company’s exploration portfolio."

Numis note:
African Barrick (Buy 640p). "Positive resource update. Resource estimate for the long awaited Nyanzaga project, comprising the Tusker and Kilimani deposits, increases Tusker by four-fold to 4Moz, consisting of 3.5Moz at 1.5g/t in Indicated and 600koz at 2.05g/t in Inferred. A scoping study is expected to be completed in Q1/Q2, with further deeper drilling throughout this quarter. Initial resource estimate for Kilimani is expected at the FY results in Feb. Positive in that it confirms previous historic estimate and a significant increase on ABG’s initial resource for the project. We include a nominal $250m (40p/sh) in our NAV for ABG’s exploration properties, although we may see this increase if the scoping study results in an economic project with some decent scale. No change to our TP and recommendation at this stage. Stock currently trading at 1.4x NAV and 4.1x CF, below the peer group."

From this week's Shares Mag:
"Dan Coatsworth
A four-fold increase in the amount of gold at the Nyanzaga project should trigger a re-rating in Tanzania-based African Barrick Gold (ABG). It now has 4.1 million ounces at the gold deposit. This should help silence those critics who are questioning from where the next leg of the company’s growth will come.
Shares in the £2 billion market cap were weak in the first half of 2011 after security problems at its North Mara mine. A summer rally was shortlived as African Barrick then disappointed at its third-quarter results (20 Oct) when mine costs came in above consensus forecasts. On 9 December, analysts downgraded their estimates for the Buzwagi mine after power problems implied operating expenditure would rise.
African Barrick will report full-year results in two weeks’ time (16 Feb), where it will outline production estimates for 2012. A resource on the latter should be released alongside the results. RBC Capital Markets reckons it will produce 789,000 ounces of gold, 15% more than 2011’s output of 688,278 ounces. Bulyanhulu and North Mara should move into higher grade material while Buzwagi’s grades may drop, it says. Nyanzaga was inherited through the acquisition of Tusker Gold in May 2010. It consists of the main Tusker deposit and the smaller Kilimani deposit. A resource on the latter section should be published at the same time as the final figures in a fortnight’s time. Last week’s (27 Jan) resource upgrade focused on the Tusker section where the miner now has 3.5 million ounces in the indicated category and 600,000 ounces in the inferred category."