Barrick Gold Corporation (NYSE:ABX) losing energy with energy subsidiary divestiture

Posted by Peter Lauro July 23, 2013 0 Comment 1045 views

Barrick Gold Corporation (NYSE:ABX) will be divesting its energy businesses for around $455M. The company will recognize a $500M loss in its Q2 in connection with these deals. These assets will be sold to Whitecap Resources Inc, Canadian Natural Resources Limited and Venturion Oil Limited. Close to $405M of the proceeds will be in cash. Yesterday, Barrick said that the closure of the energy deals are expected by 31 July and are subject to certain conditions.

Everyone on guard

Even as the mining season moves into top gear this week, investors in the precious metal companies and analysts are literally bracing themselves for dismal Q2 results. Write-downs such as the one that ABX has lined-up, plummeting profits and project deferrals will all be holding centre-stage. Miners have been suffering humungous profits as they move through one of the shakiest quarters that There are three different ways to buy health plans for 2014. the industry has faced in years.

Barrick has been seeking to sell its non-core assets as gold prices seem to be headed back into the earth from which the yellow metal is mined. Cost increases have done nothing to reduce

the struggle that mining companies have been going through. ABX said that around $90M of the $500M loss would be considered a goodwill charge and

it is already taking a huge impairment charge in the Q2.

The Chile issue

Around $4.5B-$5.5B is in connection with its stalled Pascua-Lama, Chile project. Construction at the immense gold mine has been suspended post the halt order by Chilean regulators over various environmental violations. The company is now required to construct a completely new water management structure before it is permitted to recommence construction.

In the second quarter the average price of gold dropped 13% to $1,414 per ounce. This shocking drop marks the single biggest quarterly-decline since the year 1980. Silver fared worse and fell 22% to $23.33.

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