It looks as though Barrick Gold (NYSE:ABX) is planning on taking advantage of the first bull market in gold in a very long time.
According to sources, the company is considering selling its majority stake in Acacia Mining PLC, a South African-based gold miner trading on the London Stock Exchange. It has approached several other South African miners to see if they’re interested in buying its 64% ownership stake in the company, a position which is currently valued at approximately $1.9 billion.
Acacia has three producing gold mines in Tanzania as well as exploration projects in other parts of the continent. 2016 production is expected to be between 750,000 and 780,000 ounces.
Ideally, Barrick would sell its whole stake and use the proceeds to pay down its debt, a number which currently sits at more than $9 billion. If it can’t find a buyer for the whole project, management is reportedly open to selling some of its ownership through an additional public offering.
One thing potentially standing in the way of a sale is Acacia’s terrific performance thus far in 2016, with shares rising more than 205%. Many competing mines don’t want to pay such an inflated price.
Barrick’s share price has done similarly well throughout 2016, rising more than 160% as the market rejoiced higher gold prices and the company’s cost-cutting and debt repayment plan.
Barrick shares had a nice performance in Tuesday afternoon trading, rising 2.4% to $26.83 each. The stock is close to its 52-week high of $30.44.