Barrick Gold Sells Stake in Mine to Antofagasta

TORONTO—Barrick Gold Corp. on Thursday said it had agreed to sell 50% of its Zaldí var copper mine in Chile to Antofagasta PLC for $1 billion in cash, and to work with its new Chilean partner on maximizing the value of the mine.

The sale comes as Barrick, the world's largest gold company by production, works toward a target of cutting debt by $3 billion by the end of this year. The Canada-based company said that, with the sale of the Zaldí var stake, it is almost two-thirds of the way to its goal, with about $1.85 billion in transactions announced so far.

"The sale of 50% of Zaldí var is consistent with our strategy to create long-term value for our shareholders. By selling a stake in this noncore asset, we strengthen our balance sheet while maintaining significant exposure to a strong cash-generating operation," said Kelvin Dushnisky, co-president of Barrick.

Like other miners, Barrick has been struggling with slumping metals prices and pressure to cut costs.

Barrick said the partnership will benefit from Barrick's "intimate knowledge of the Zaldí var operation and its potential" as well as Antofagasta's deep operating expertise in Chile. The partners will explore potential synergies, include the ability to leverage Antofagasta's extensive in-country procurement programs, contractor relationships and administrative efficiencies, it said.

"Together, we believe that we are well positioned to enhance the long-term value of the Zaldí var operation through our collective best practices," said Diego Hernandez, chief executive of Antofagasta.

Antofagasta, which will act as operator of the mine, will pay Barrick $980 million upon closing and another $25 million over the next five years, the company said. The transaction is expected to be completed in late 2015.

Zaldí var produced 222 million pounds of copper last year.

Barrick said it would provide a general update on its debt-reduction efforts when it releases its second-quarter results on Aug. 5.

Write to Carolyn King at [e-mail]

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