World's largest gold miner Barrick Gold Corporation (ABX) has entered into an agreement to sell Barrick Energy Inc. for roughly C$455 million ($440.8 million) as a part of its portfolio optimization strategy. Of the total consideration, Barrick will receive cash proceeds of C$405 million ($392.4 million) and a gross overriding royalty of roughly C$50 million ($48.4 million) on certain lands.
Barrick will get roughly C$173 million ($167.6 million) from the sale of shares and assets of Barrick Energy to Canadian Natural Resources Limited (CNQ). In addition, Barrick will get roughly C$59 million ($57.1 million) from sell of certain assets to Venturion Oil Limited and roughly C$174 million or $168.5 million from sale of certain assets to Whitecap Resources Inc. The transactions are expected to close on or before Jul 31.
The portfolio optimization strategy falls under the disciplined capital allocation framework. The company is looking for opportunities to divest certain non-core assets and the Barrick Energy divestment is a part of that endeavor.
However, Barrick expects to incur half a billion loss in the second quarter of 2013 owing to the divestment agreement and related transactions. Of the $500 million estimated loss, roughly $90 million relates to goodwill, which is the difference between the net proceeds and the carrying value of Barrick Energy as of Jun 30, 2013.
The financial advisors to Barrick for these transactions are Rothschild and Scotia Waterbus. Norton Rose Fulbright Canada LLP is the legal counselor.
Barrick Gold currently carries a Zacks Rank #3 (Hold).
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