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Barrick mulls sale of Chilean copper mine to cut losses; report

Published: 02:03 17 Mar 2015 AEDT

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Barrick Gold (TSE:ABX) (NYSE:ABX) is mulling the sale of the Zaldivar copper mine in Chile to cut debt and losses, according to a report in the Financial Times, which cited bankers and mining executives.

In February, Barrick announced a fourth quarter net loss of $2.85 billion. The company posted a similar loss for the same quarter in 2013, and currently has total outstanding debt of US$11.65 billion.

The sale of Zaldivar, one of Barrick's largest assets, could generate some US$1.5 billion, the newspaper said, and draw interest from Chinese companies and private equity firms.  

The sale would be part of a US$3 billion debt reduction strategy announced earlier this year. As part of the plan, Barrick said last month it had already started the process to sell its Cowal mine in Australia and a joint venture in Papua New Guinea.

Zaldivar produces about 126,000 tons of copper per year and is located next to the world’s largest copper mine: Escondida, which is co-owned and managed by BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO).

The Zaldivar copper mine is located in the foothills of the Antofagasta region, at a height of 3.300 metres. Its construction required an investment of US$600 million and production started in August 1995, with a capacity of 125,000 tons.

Last February, Barrick endured a US$2.8 billion after-tax impairment charge. The gold miner took a writedown on its Lumwana copper mine in Zambia after the African country raised the royalty rate on the country's open pit mining operations from 6 to 20 percent. Barrick also sold its Cerro Casale project in Chile over lower gold and copper prices.

Barrick Chairman John Thornton wants to restore profitability by focusing on gold mining, with no plans to bolster its cooper operations: "We believe the only way to recapture that is to consciously go back to the future and understand who we were, what made us distinctive, what gave us our purpose and our values and reinterpret that for the 21st century."

Last November, Barrick was discussing plans to allow Chinese state-owned Zijin Mining Group to revive the bungled Pascua-Lama project.

When the Pascua Lama gold project was closed in 2013 for environmental breaches on the Chilean side, no one knew what would happen to the bi-national (Argentina-Chile) mega project, which cost Barrick US$5.1 billion in writedowns. 

The mining minister of Argentina’s San Juan province has indicated that Zijin wants to invest in Pascua after visiting the mine site several times, potentially suggesting that China's Zijin could also be interested in additional Barrick assets in Chile.

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