(Kitco News) - Activity in the mining sector continues to heat up as the world’s second-largest gold producer improves its balance sheet by selling off a non-core asset.
On Tuesday, Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX) announced an agreement to sell its 50% interest in the Donlin Gold Project in Alaska to affiliates of Paulson Advisers LLC (“Paulson”) and NOVAGOLD Resources Inc. (NYSE American, TSX:NG) for $1 billion in cash.
Barrick also granted NOVAGOLD an option to purchase the outstanding debt owed to Barrick in connection with the Donlin Gold Project for $90 million if purchased prior to closing, or for $100 million if purchased within 18 months from closing, when the option expires. If that option is not exercised, the debt will remain outstanding, substantially in accordance with its existing terms.
“The Donlin agreement allows Barrick to exit the Donlin Gold Project at an attractive valuation while allowing NOVAGOLD and Paulson to pursue the development of the project. This is a good example of an instance where an asset we own might be better suited in the hands of others while we pursue our priority portfolio of Barrick-managed growth projects,” said Mark Bristow, president and chief executive of Barrick Gold.
The Donlin project is located in western Alaska, about 300 km from Anchorage. The project is positioned to be one of the world’s largest gold mines with 39 million ounces in measured and indicated mineral resources at an average grade of 2.24 grams per tonne.
