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Barrick to Sell Kanowna Gold Mine

Zacks Equity Research

Barrick Gold Corporation (ABX) has agreed to sell its Kanowna gold mine (Kanowna Belle and Kundana mine operations) in Western Australia to Northern Star Resources Ltd for A$75 million ($66 million) as part of its portfolio optimization strategy. The transaction is subject to certain closing conditions and is expected to close in Mar 2014.

UBS Securities Canada Inc. and BofA Merrill Lynch are acting as financial advisors to Barrick, while Clayton Utz is the company’s legal counsel for the transaction.

As part of its disciplined capital allocation framework, Barrick is actively pursuing opportunities to optimize its portfolio, including the divestiture of certain non-core assets. Last month, the company announced its plans to divest the Plutonic mine in Western Australia to Northern Star Resources Ltd for a total cash consideration of A$25 million ($22 million).

Lower metal pricing coupled with higher tax and interest expenses pulled down Barrick’s profit in third-quarter 2013, reported on Oct 31. However, adjusted earnings beat the Zacks Consensus Estimate. Revenues fell year over year, but beat expectations.

The company saw higher gold and copper production in the quarter. Though Barrick lowered its gold production guidance for 2013, it raised its copper production outlook.

Barrick, a prominent player in the mining industry along with Newmont Mining Corporation (NEM), operates mines and advanced exploration and development projects on four continents, and holds large land positions on some of the most prolific and prospective mineral trends.

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

Better-ranked stocks in the gold mining industry include Golden Star Resources, Ltd. (GSS) and Lake Shore Gold Corp. (LSG). Both hold a Zacks Rank #2 (Buy).

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