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Barrick Concludes Divestment of 50% Interest in Zaldivar

Zacks Equity Research

Barrick Gold Corporation ABX declared that it has completed the previously announced divestiture of a 50% interest in the Zaldivar copper mine to Antofagasta Plc.

This agreement to sell 50% interest in the Zaldivar copper mine was announced in July this year for a total cash consideration of $1.005 billion, forming a new partnership with Antofagasta − one of the world’s leading copper companies. Antofagasta has an exceptional track record of building and operating mines in Chile and thus, Barrick looks forward to benefiting from Antofagasta’s experience for its future development projects.

The net proceeds from this divestment will be used to reduce debt. Moreover, according to Barrick President Kelvin Dushnisky, the sale will boost the company’s balance sheet, helping it to focus more on core cash-generating assets. The company further stated that no material changes have been made to the terms of the agreement since the announcement of the transaction.

Barrick’s long-term debt was roughly $11.3 billion as of Sep 30, 2015, down from around $12.9 billion a year ago. The company reduced its total debt by 15% from $13.1 billion to $11.2 billion through the end of third-quarter 2015, thereby considerably lowering its near-term debt repayment obligations. Currently, the company has less than $250 million in debt due before 2018. Also, roughly $5 billion of its $11.2 billion outstanding debt will mature after 2032.

Barrick has announced asset sales, joint ventures and partnerships worth $3.2 billion since the beginning of this year. The company also remains committed to achieve its debt reduction target of $3 billion for 2015, which, after completion will represent 23% reduction in debt since the beginning of 2015.

Shares of Barrick rose 3.5% to close at $7.60 on Dec 1.

Barrick currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the gold mining space include Harmony Gold Mining Company Limited HMY, NovaGold Resources Inc. NG, and Richmont Mines Inc. RIC, all carrying a Zacks Rank #2 (Buy).

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