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.

Nyanzaga Resource Continues to Grow

Total Resource now 3.75Moz Au Indicated and 0.85Moz Au Inferred

ABG is pleased to announce a further uplift to the previously declared Mineral Resource estimate for the Nyanzaga Project, with the addition of the Kilimani zone. This continues to increase our confidence that the Nyanzaga project, which comprises the Tusker and Kilimani mineralised zones, has the potential to become our next mine in Tanzania.

The inclusion of this near surface, oxide resource in the Kilimani zone and the further expansion of the overall in-pit resource should improve the overall project economics with additional production at the start of the mine life.

The in-pit resource has been increased by a further 0.5Moz and is now in excess of 4.6Moz Au, consisting of 3.75Moz at 1.42g/t Au Indicated and 0.85Moz at 1.81g/t Au Inferred. The updated modelling now confirms the opportunity to exploit the Tusker and Kilimani mineralised zones in a single open pit, and is another highly encouraging step in the Company's overall strategy of realising the potential of its existing portfolio of high quality assets.

Since announcing the updated mineral resource for the Nyanzaga project in January 2012, desktop scoping work has focused on the modelling of the Kilimani near-surface resource, whilst field activities have focused on continuing geotechnical, hydrology and metallurgical drill programmes to allow us to better constrain the open pit model. As a result of the addition of the Kilimani resource we have been able to re-model the open pit resource, which has resulted in a larger, single pit incorporating both the Tusker and Kilimani resource areas.

Commenting on the expanded Mineral Resource at Nyanzaga, CEO Greg Hawkins said:
"The addition of near surface, oxide ounces and resulting further expansion of the overall deposit further increases our confidence in the potential for Nyanzaga to become our next mine in Tanzania. Not only does it add to the overall scale of the deposit but it further improves the economics with an improved production profile early on in the life of the project."

..African Barrick Gold production worse than expected

By Garry White | Telegraph – 24 minutes ago

IVKA.F 4.88 0.00

......
Tanzanian-focused miner African Barrick Gold posted a 17pc fall in first quarter gold production, sending its shares down.

The fall in output was against a weak comparison in the first quarter of last year, when production fell 2pc dues to power outages.

African Barrick Gold

In the three months ending March, pre-tax profits slumped by 26pc to $55m (£34.2m) after a 22pc rise in costs.

This year’s production slide was caused by “the ongoing waste stripping at North Mara and reduced head grade at Buzwagi as planned.” The company, which is majority owned by Canada’s Barrick Gold, produced 144,643 ounces of gold in the first three months of the year.

“We had expected African Barrick Gold (ABG) to deliver a weak first quarter result and it did not disappoint,” Investec (Frankfurt: A0J32R - news) analysts Hunter Hillcoat said. “We should see an ongoing lift in ABG's operational performance across 2012, but otherwise find it difficult to see a positive catalyst, other than potential gold price performance.”

The company maintained its full-year gold production targets of 675,000 to 725,000 ounces at a cost of producing each ounce of $790 to $860 per ounce. Analysts think it is now likely that output will come in at the lower end of the forecast range.

ABG was spun out of Barrick Gold, the world’s largest gold miner by market capitalisation, in March 2010 but has experienced a series of setbacks since listing in London. Listed at 575p the shares are about 36pc below their flotation price.

Problems included a fuel-theft ring at one of its mines, a machete-wielding mob attacking the North Mara mine, in a mass attempt to steal gold, and power problems.

It currently operates four mines in north-west Tanzania and has a number of exploration projects.

The shares fell 4.05p to 364.85p in early trading.

..

StockMarketWire.com
African Barrick Gold has received final approval from the Tanzanian vice-president's office responsible for environment for the potentially acid forming waste rock permit at its North Mara mine, with immediate effect.

The granting of the PAF permit, together with the non-acid forming permit which was granted in late 2011, will allow ABG to progress the major waste stripping programme in the Gokona pit at North Mara in order to open up higher grades zones in the open pit in the second half of 2012.

Chief executive Greg Hawkins said: "This approval is an important milestone for North Mara in delivering its mine plan going forward.

"As we have previously communicated, our waste stripping activities had been constrained and we now look forward to being able to access the higher grade zones in the Gokona pit from the second half of this year onwards as expected."

StockMarketWire.com
African Barrick Gold has increased its interim dividend - despite lower earnings and net profits.

The group said its financial performance for the six months to the end if June reflected the planned lower production levels when compared to the corresponding period, with the benefit of the 12% increase in the gold price compared to H1 2011. ABG said that despite lower production levels, it generated earnings before interest, tax, depreciation and amortisation of US$171m and earnings per share of US15.9 cents, which enabled it to declare an interim dividend of US4.0 cents per share for 2012, up 25% on 2011.

It adds: "We are also in a position to continue to invest in profitable growth in our business, as evidenced by the approval of the Bulyanhulu CIL expansion during the period on which we expect to commit up to US$50 million in 2012.

"We have also invested US$119m over the first half of the year in our ongoing operations in order to maintain our strong operational platform.

"While we are committed to investing in the business, we also remain focused on improving efficiencies throughout the organisation in order to further enhance cost and capital control."

Revenues were 8% down of 2011's first half at $534m and EBITDA was 30% lower.

Net profits were down 46% at $65m.

StockMarketWire.com
African Barrick Gold has agreed to take over Aviva Mining (Kenya) for and initial cash consideration of A$20m.

Aviva Mining (Kenya)'s the assets include interests in a number of licences in west Kenya.

The acquisition is subject to the approval of Aviva Mining's shareholders, which will be sought at a general meeting in late August or early September; and the consent of the Kenyan Competition Authority, with completion expected shortly after.

Statement regarding today's announcement by Barrick Gold Corporation ("Barrick")
The Board of ABG notes the announcement made today by Barrick in which Barrick confirmed that it is in preliminary discussions with China National Gold Group Corporation ("China Gold") regarding its holding in ABG. At this stage, there can be no certainty that these discussions will result in an offer for Barrick's holding in ABG. Should China Gold acquire more than 30% of the voting interest in ABG, it would then be required to make an offer for the whole of ABG's issued ordinary share capital.

The Panel Executive has confirmed to Barrick on an ex parte basis that, in view of Barrick's 73.9 per cent stake in ABG, the 28 day deadline referred to in Rule 2.6(a) of the Code will not apply to China Gold in respect of this announcement.

A further announcement will be made in due course.

StockMarketWire.com
Morgan Stanley has downgraded the gold producer African Barrick Gold (LON:ABG) to 'equal weight' from 'overweight' with a share price target of 480 pence as the company is viewed to have limited means to increase shareholder returns. Analyst Alain Gabriel: 'African Barrick Gold has few internal levers to pull to grow volumes or deliver the material cost cuts that, in turn, could increase returns. Valuation is not demanding, but that is justified by near-term risks to volume and cost estimates. We move to EW, with a £4.80 PT. We argue that capital allocation could be rebalanced in favour of cash returns to shareholders. We think the current dividend payout looks too low at 24%, and limited earnings growth and sustainably high operational costs will not support long-term cash flow (and dividend) growth. Since the beginning of July shares in African Barrick Gold have increased by approximately 18 per cent.

StockMarketWire.com
African Barrick Gold's board has approved the order of long lead items to expand the Bulyanhulu Upper East project.

The project was previously solely based on the 1.2 million ounces of reserves located in Reef 1 of the Upper East zone, but ABG has now completed a positive scoping study to incorporate the 900,000 ounces (koz) of gold which currently sit in reserves in Reef 2 of the Upper East zone.

ABG is now progressing with pre-feasibility and feasibility work on Reef 2 with the aim of completing a combined feasibility study for both reefs by the end of the first quarter of 2013.

Production from the Upper East zone is targeted to begin in late 2014 and is now expected to average in excess of 90koz per annum over the life of mine at average cash costs of $608 per ounce.

ABG says the incorporation of Reef 2 significantly enhances the project economics, driving a post tax IRR of 34% at $1,700 per ounce.

The project is estimated to require approximately $100m of pre-production capital, to be spent in 2013 and 2014 and is planned to deliver life of mine production of 1.86Moz over the next 20 years.

Chief executive Greg Hawkins said: "One of our key aims for this year is to progress the expansion of Bulyanhulu in order to accelerate the realisation of the value provided by the scale of the reserve base.

"In May we received board approval for the CIL expansion, and we have now successfully expanded the scope of the Upper East project whilst maintaining our planned timeline for first production.

"With the two expansion projects, we now have a clear path to increasing production levels at Bulyanhulu towards 400,000 ounces per annum over the coming years."

StockMarketWire.com
African Barrick Gold's cquisition of Aviva Mining (Kenya) from Aviva Corporation has been approved by the Kenyan Competition Commission.

All conditions have now been satisfied and the transaction will now be finalised.

ABG chief executive Greg Hawkins said: "With the final condition for the acquisition of AMKL now satisfied we look forward to continuing the successful exploration programme on this highly prospective land package.

"ABG has a proven track record of successfully developing early stage prospects into large scale deposits and we are confident of further successes in Kenya."

..

Questor share tip: Time to sell African Barrick Gold
By Garry White | Telegraph – 2 hours 37 minutes ago


African Barrick Gold has cut production guidance again. Questor says sell.

African Barrick Gold 465p Questor says: SELL

African Barrick Gold (ABG) issued yet another disappointing statement on Friday which has become something of a habit.

The negative news this time was a cut in full-year production guidance and a surge in costs, which caused third-quarter profits to fall by more than 70pc.

This is the third consecutive year that the company has been forced to cut its production guidance. It has endured fuel-theft rings, raids on its mines and power shortages over the relatively short time it has been listed in London.

ABG said full-year gold production would now be about 5pc to 10pc below the lower end of its 675,000 to 725,000 ounce guidance.

ABG was spun out of Canadian gold behemoth Barrick Gold in 2010, the world’s biggest producer of the precious metal. It was floated at 575p a share, before slumping to lows below 310p a share in the past few months.

Barrick is currently in talks with China National Gold Group about selling its 74pc stake in ABG to the state-owned company. The shares jumped substantially since the talks were revealed and, should an agreement fail to be reached, Questor sees significant downside.

In fact, given Friday’s gloomy news, there is potentially more downside in the event China walks away than upside should a deal be struck. This means the risks look skewed to the downside.

Questor has recommended the shares as a buy as low

as 317p and as high as 448p, so all investors who acted on the advice are sitting on a profit. Questor thinks it is time to bank these gains and the shares are a sell.

Sell ABG now... a good short at 433p.

StockMarketWire.com
Barrick Gold Corporation is no longer in talks over its holding in African Barrick Gold with China National Gold.

Barrick president and chief executive Jamie Sokalsky said: "These discussions were part of our ongoing efforts to identify opportunities to optimize our portfolio, however we are approaching this in a prudent and disciplined manner and will only proceed with opportunities that generate acceptable value for Barrick.

"African Barrick Gold's assets hold significant potential, and we will continue to look for ways to best realize that value for our shareholders."

Westhouse Securities has retained a 'neutral' rating for African Barrick Gold but reduced its target price for the stock from 195p to 180p despite the company pleasing the market with its first-quarter report on Thursday.

Deutsche Bank comment:
We believe African Barrick has the right management and plans to deliver the cost and capex cutting started in 2013, and to drive down All-In Sustaining Costs. The group has responded very well to the ‘back against the wall’ moments of 2013, and we expect it to announce more cost cutting measures, focused on mining efficiencies, at its forthcoming FY13 results. In the weak gold price environment which we expect into the medium-term, ABG will need to work hard to maintain a margin post sustaining costs, in particular, through delivery of its grade improvement plans. Hold on balanced risk/reward.
ABG released strong production and cash cost results for FY13. Full year group production was 641.9koz, up 5.4% y/y, and 3% higher than our forecast for 623koz. The strong end to the year was driven by a 10% q/q improvement in grades at Bulyanhulu, as expected, offset somewhat by planned lower grades at Buzwagi and planned plant downtime at North Mara. Cash costs for FY13 of US$827/oz were well below the company’s guidance for US$925/oz and DBe US$904/oz, on the higher production and cost cutting. All In Sustaining Costs were US$1,362/oz for the year, clearly above the current gold price, but 4Q13 AISC did drop down to US$1,171/oz, due to ongoing cost cutting efforts. Group net cash stood at US$282m at the end of the year, higher than our estimate of US$152m.
ABG is aiming to take US$185m out of its cost base by end 2014, and today it indicated that it has cut more than US$100m by end 2013 – in particular, it is ahead of plan in cutting corporate admin and exploration costs. The group’s efforts in bringing AISC down for a fifth successive quarter, to US$1,171/oz in 4Q13, down 8% q/q, testify to the success of the plan so far. When it reports FY13 prelims on 12 February, we expect African Barrick will target a further cut to its cost base, from focusing on the mining cycle to drive up mining efficiencies. Our 2013e EPS increases substantially on the better results, given the operational gearing within the group. For 2014e, we have made one change to our forecasts, increasing grades at North Mara from 2.4g/t to 2.9g/t in line with ABG’s guidance.
Our 12-month TP is based on 0.8x our end- 2013E NAV, applying a WACC of 5% to a life of- mine DCF model. Key risks include higher-/lower-than-expected gold prices, lower-/higher-than-expected costs and Tanzanian Shilling."

Canaccord note:
"We maintain a HOLD and 180p target price (Edited), which is based on 0.98x NAV at Canaccord Genuity’s forward gold price deck."

HARRY , i was in and out of these last year ,the target i found for Canaccord is 180p am i missing something ?

No, I think that must be a typo! Why rate as a hold but predict a doubling of the sp? Maybe they meant 210p? I will have root around to see if that is shown on the Digitallook site.

As you say jimmy, 180p is their target. I will correct the post.

30p below where they are now . I was looking on DigitalLook also..

HSBC downgrades African Barrick Gold from neutral to underweight, target cut from 200p to 160p.

RBC Capital Markets retains outperform on African Barrick Gold, target increased from 220p to 250p

Moving up strongly this morning. Was given on the chart thread over the weekend.