Dallas, Texas 12/24/2013 (FINANCIALSTRENDS) – A lot has been happening in the world of gold mining lately as well as at Barrick Gold Corporation (USA) (NYSE:ABX). The company announced that it will be divesting its Plutonic mine that is located in Western Australia. The mine will be sold to Northern Star Resources for A$25 million. This transaction is subject to the customary closing conditions and the expected closure will be in Feb 2014.
The divested mines
As part of the disciplined capital-allocation framework, Barrick Gold Corporation (USA) (NYSE:ABX) is pursuing various opportunities of optimizing its portfolio. This includes the divestiture of some of its non-core assets. In 2013 October, the company completed the sale of the Yilgarn South assets. These were made up of the Granny Smith, Darlot and Lawlers mines that are located in Western Australia. These mines were sold-off to Gold Fields Limited. These assets were sold by Barrick Gold Corporation (USA) (NYSE:ABX) for $300m and are subject to the closing-adjustment deduction that is estimated at $30M.
Gold price drop
A dip in metal pricing in conjunction with a rise in interest expenses and increases taxes pulled down the company’s 2013 Q3 profits that was reported on 31 October .Nevertheless, the adjusted earnings managed to top analyst estimates. There was a drop in y-o-y revenues but these too topped analyst estimates. Barrick Gold Corporation (USA) (NYSE:ABX) saw an increase in copper and gold production in the quarter but it lowered the company’s gold production outlook for 2013 and upped the copper production outlook.
Amidst all of these ups and downs, 2 more directors have now resigned from Barrick Gold Corporation (USA) (NYSE:ABX) adding to the turbulence in the board that is already going through a great deal of transition. Robert Franklin and Donald Carty, both of who had joined the company board in 2006, when Barrick Gold Corporation (USA) (NYSE:ABX) had acquired Placer Dome Inc. Both these directors have resigned from the company’s board with immediate effect.
This particular announcement comes not even 2 weeks after Peter Munk, the company’s founder and Chairman announced his retirement from the company. Other long time directors, Brian Mulroney and Howard Beck are also stepping down at the company’s annual meeting in 2014. John Thornton, the former President Goldman Sachs will be replacing Munk and 4 new directors will be joining the company board.
Investor complaints
All these changes to the board come just after numerous complaints from investors about dismal corporate governance at the company. Mr Thornton has now outlined a new course for Barrick Gold Corporation (USA) (NYSE:ABX) as the company is now moving ahead with some new partnerships in Asia. Until very recently, Gold was definitely in stormy weather.
To add salt to the very fresh wounds, On 18 December, the Federal Reserve announced that it will be trimming its QE. Now the price of gold had dropped much below the $1,200 per ounce, which is its lowest level since 2010 August. It must be remembered that gold is after all a commodity. This means that there can be a further dip in its prices and interest-rates still have distance to go before they move back to pre-recession levels and gold might just take a further beating.
