What price is half a hole in the ground?
Not half of any hole, half of one of the world's biggest in the form of the Kalgoorlie Superpit goldmine in Australia which is being offered for sale by Canada's
Keen to slash its $9 billion debt burden by $2 billion this year, and more in the medium term, Barrick's aim is to owe its bankers less than $5 billion.
Some of the debt-reduction campaign is being achieved by applying cash flow to debt with $968 million repaid so far this year.
But the big cuts are coming from asset sales and one of the countries which has seen a Barrick exodus is Australia with the Canadian-based company selling a number of goldmines over the past two years.
A Deep History
The Superpit, also as the Fimiston mine, is a massive open cut mine which is two miles long, a mile wide and half a mile deep.
Gold has been mined from the area consumed by the giant hole since 1893 when an itinerant Irish prospector, Paddy Hannan, discovered what became known as the Golden Mile.
Frequent ownership changes settled into a business called Kalgoorlie Consolidated Gold Mines (KCGM) which is half-owned by Barrick and half by U.S.-based
Under the terms of their joint venture Newmont is believed to have the right of first refusal, meaning it is the likely buyer if a mutually acceptable value can be agreed.
Production at the Superpit is running at between 700,000 and 800,000 ounces a year, making it one of the world's biggest goldmines. The cost per ounce, despite the depth to which the mine has been dug, are between $725-and-$775 an ounce.
Barrick has hinted previously that its half-share of the Superpit might become available though selling a stake in a joint venture is more complicated than the earlier sales of wholly-owned mines.
Heightened Interest
Three factors have put the Superpit back in the news:
- Confirmation from Barrick that it is about to start a sales process.
- The relatively high gold price which is up 25% since the start of 2016 from $1072/oz to the latest price of $1342/oz, and
- An expected increase in interest in gold next week when Australia's biggest mining conference, the annual Diggers and Dealers forum is held over three days in Kalgoorlie.
Barrick said in its June quarter report that it intended to initiate a process to explore the sale of its half share in the KCGM operations.
Earlier this month a Newmont executive, Garry Goldberg, told the
However, the nature of most joint ventures is that while an existing partner has first right to buy a jointly-owned asset it also has to match, or better, an outside offer.
