SYDNEY—Barrick Gold Corp. said it will sell an
Australian gold operation to local miner Evolution Mining Ltd. for
US$550 million, one of several planned sales aimed at helping the
miner reduce billions of dollars in debt.
Barrick, the world's largest gold miner, said it expects that by
October, the Cowal gold mine in New South Wales state will be run
by Evolution, which is Australia's fourth-largest listed gold miner
and aims to become a globally known producer of the precious
metal.
The Canadian company has been working to strengthen its balance
sheet and previously outlined plans to reduce debt by US$3 billion
by the end of this year. In addition to Cowal, it has been looking
for buyers for a mine in Papua New Guinea and a stake in the
Zaldivar copper mine in Chile. The miner is also considering the
sale of a nickel project it co-owns with Glencore PLC, according to
people familiar with the matter.
"The sale of Cowal is consistent with the strategy we have
outlined to create long-term value for our owners, making a
significant contribution to our debt reduction target while further
focusing the geographic footprint of our portfolio," said Barrick
Co-President Kelvin Dushnisky.
The company has sold six mines for a total of US$1.3 billion
since 2012, five of which are in Australia, the largest gold
producing nation after China. Its 50% stake in the Kalgoorlie Super
Pit operation is Barrick's only remaining Australian gold-mining
interest.
Apart from reducing debt, the sale of the mine will help Barrick
trim costs as the miner closes its Australian office in Perth.
Evolution said it would fund the deal through a roughly 248
million Australian dollar (US$194 million) entitlement offer and
refinanced corporate credit facilities.
Newcrest Mining Ltd., Australia's largest listed gold miner,
remains the biggest shareholder in Evolution even after it halved
its stake to 15% earlier this year to help shore up its own balance
sheet. It has been Evolution's top shareholder since the company
was formed in 2011 through a merger of Catalpa Resources Ltd. and
Conquest Mining Ltd., as well as the concurrent acquisition of
Newcrest's interests in the Cracow and Mt Rawdon mines in
Queensland state.
The acquisition will turn Evolution into Australia's
second-largest listed gold miner. Evolution also intends to acquire
the Australian mines of La Mancha Group International BV, which
operates the Frog's Leg and White Foil mines in Western Australia
state.
La Mancha had agreed to provide Evolution with up to A$100
million to pursue other growth options, as Evolution, in its own
words, aims to become a "globally relevant, Australian-focused,
midtier gold producer."
"This is a truly transformational acquisition for Evolution,"
Executive Chairman Jake Klein said of the Cowal mine takeover. The
open-pit mine produced 268,000 troy ounces of gold last year.
Alistair MacDonald contributed to this article.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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