In February, Barrick Gold announced the creation of African Barrick Gold (ABG), a new public company structured to generate more value from Barrick Gold’s African operations, while allowing local investors to participate in the gold mining sector.
Initially listed on the London Stock Exchange, ABG holds Barrick Gold’s four gold mines in Tanzania, as well as its Tanzanian exploration portfolio. Barrick Gold also plans to pursue a listing for the new company on the Dar es Salaam Stock Exchange to facilitate local participation and ownership of the company.
ABG’s operations in Tanzania include the Bulyanhulu, Buzwagi, North Mara and Tulawaka gold mines. Collectively, they produced 716,000 ounces of gold in 2009.
“As an Africa-focused public company, we believe that African Barrick Gold will be better positioned to generate shareholder value and pursue new opportunities, which Barrick will continue to benefit from as a majority shareholder,” says Barrick gold CEO Aaron Regent, who will also serve as chairman of the new company. “ABG will be able to invest in and acquire smaller assets typical of Africa, which could be quite meaningful to the growth profile of this smaller entity. The new company will be driven by a management team with both mining expertise and experience in Africa.”
Barrick Gold offered approximately 25 per cent of African Barrick Gold to investors through an initial public offering (IPO) in London, retaining a 75 per cent ownership stake in the new company. With an offer price of £5.75 per share, the London IPO closed in late March, selling about 404 million shares worth a total of $834 million. Upon closing of the offering, ABG had a market capitalization of approximately $3.55 billion, making it one of the 100 largest companies on the London Stock Exchange. ABG will have an initial cash balance of approximately $280 million and no debt.