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Why Barrick Gold is shaking things up Add to ...

These are stories Report on Business is following Wednesday, Aug. 15, 2012.

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Barrick in talks on Africa stake
Barrick Gold Corp. is making good on a pledge to shake things up as its new CEO moves quickly on his review of the company's sprawling operations.

The Canadian miner said today it is in preliminary talks to sell its 74-per-cent stake in African Barrick Gold PLC, worth something in the $2-billion (U.S.) range as of yesterday, to China National Gold Group Corp.

As is standard in such statements, it said talks are at an early stage, and may not result in a deal.

Just a few months ago, when he took the job, CEO Jamie Sokalsky pledged a review of Barrick, a move that would put the focus on returns. And, as The Globe and Mail's Pav Jordan reports, Barrick is scrambling to contain overruns on costs, and put its efforts into its main projects.

The company reiterated that today: "Barrick has adopted a renewed focus on maximizing shareholder value through a disciplined capital allocation program which includes optimizing Barrick’s portfolio of assets and maximizing returns on investment and free cash flow."

Barrick and other gold miners, such as Kinross Gold Corp., are trying to boost their lagging stock prices. Like Barrick, Kinross replaced its CEO earlier this month.

Investors are looking for just that, a focus on returns, rather than the amount of gold pulled out of the ground. And analysts have their price targets on the stocks at low levels.

A sale of the African stake could be good value for Barrick, if all goes according to plan.

“African Barrick has always looked like it offered good value albeit at a high risk, and if the potential acquirer can get the asset and is comfortable with the risk, you will be able to get a reasonable set of assets for a good price,” Investec analyst Hunter Hillcoat told Reuters.

Manufacturing sales dip
Canadian manufacturers had a better June than the headline number would suggest.

Overall, manufacturing sales dipped 0.4 per cent, according to Statistics Canada today. But when you strip out oil and coal, sales climbed 1.1 per cent.

The trouble came as sales of petroleum and coal products sank 10.6 per cent, as prices slipped 4.9 per cent and several refineries were shut down.

Sales of such products are now down 23.2 per cent from a March peak, and at their lowest since August 2010, the agency said.

On the plus said, sales of machinery and transportation equipment climbed.

Also affecting today's reading was a revision to the May measure.

"Much of the headline weakness came in petroleum and coal products, on refinery shutdowns and softer prices," said chief economist Avery Shenfeld of CIBC World Markets.

"Autos had a gain, but not a strong as we expected after the export data. Overall, a bit soft, but not stunning given the offsetting revision to the prior month and the impact of prices on the headline tally."

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  • Barrick Gold Corp
  • Updated June 23 4:00 PM EDT. Delayed by at least 15 minutes.

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