Toronto, Canada — MININGREVIEW.COM — 14 September 2009 – Barrick Gold Corporation “’ the world’s largest gold producer “’ says it may use some of the US$3.5 billion (R28 billion) it raised in a share sale last week for acquisitions of “higher- risk projects.”
“Raising equity proceeds allows us to de-leverage the balance sheet, to ensure that we have a strong capital structure and financial capacity to support our operations, to fund our projects, and the capacity to look at new acquisitions as well,” said Barrick CEO Aaron Regent at a mining conference in Toronto. “We’ll be looking at less developed countries. We have some room to take on higher-risk projects,” he added.
Regent did not specify which projects he was referring to.
The company sold 94.8 million common shares for US$36.95 apiece, it revealed in a statement last week. Underwriters had an option to increase the sale to US$4 billion (R32 billion) in what is the biggest stock offering in Canadian history.
“If they found something in a higher political-risk region, their large profile of generally low political-risk assets could absorb it,” said Adam Graf, an analyst with Dahlman Rose & Company in New York, in a telephone interview with Bloomberg News.
Barrick raised the funds to unwind fixed-price bullion contracts as part of efforts to tie the company’s valuation more closely to the price of gold, which rose last week to the highest price since March 2008. Bullion producers are trying to increase reserves to benefit from the higher prices, which have been haven’t dipped below US$900 an ounce since May.
Barrick said earlier in the year that it would start building its US$3 billion (R24 billion) Pascua-Lama mine project on the Chile-Argentina border, after the two South American countries resolved a tax dispute over the project. The mine is estimated to yield as much as 700 000 ounces of gold and 25 million ounces of silver annually over an expected life of at least 25 years, once it starts operations in 2013.
The company began production at its Buzwagi mine in Tanzania in May this year, and the Cortez Hills project in Nevada and Pueblo Viejo project in the Dominican Republic are on schedule to start production in 2010 and 2011, respectively.