Barrick sells 50% in Papua New Guinea unit to China's Zijin

Barrick sells 50% in Papua New Guinea unit to China's Zijin

Porgera gold mine in Papua New Guinea (Image courtesy of Barrick Gold)

Canada’s Barrick Gold’s (TSX, NYSE:ABX), the world's No.1 producer of the precious metal, has sold 50% of its subsidiary that manages the Porgera gold mine in Papua New Guinea to China’s Zijin Mining Group Co in a $298 million cash deal.

The unit, Barrick Niugini, owns 95% in the Porgera mine and the Papua New Guinea owns the rest.

After the sale, part of the Canadian miner efforts to cut debt by $3 billion by the end of this year, Zijin and Barrick will jointly control Barrick Niugini.

The news comes barely a day after the gold giant announced the sale of its Cowal gold mine in Australia's New South Wales to Evolution Mining.

The deal is part of a long-term strategic cooperation agreement between Barrick and Zijin to collaborate on future projects and joint investments, leveraging the strengths of each company.

"Our partnership with Zijin is the first step in a long-term strategic relationship with one of China’s leading mining companies—a multi-faceted partnership that will provide significant opportunities to work together on an ongoing basis as we continue to create value for our respective owners," Barrick Chairman John L. Thornton said in a statement.

Zijin is China's No.1 gold producer and the 2nd largest large copper producer, along with a portfolio of producing and development assets in its home country, Tajikistan, Mongolia, Russia, Australia and Kyrgyzstan.

The gold giant has been looking for buyers for a stake in the Zaldivar copper mine in Chile and it is also said to be considering the sale of a nickel project it co-owns with Glencore (LON:GLEN).

Thornton's connections

The deal should not come as a surprise for those following Barrick moves. Since chosen to lead the world’s largest gold miner in 2013, John Thornton has taken Barrick a step closer to Asia.

The former Goldman Sachs Group Inc. President has always seemed open to a reorganization of the entire business. He also has experience dealing with Chinese firms, as he helped start up a business leadership program at Beijing’s Tsinghua University and sits on the board of China Unicom, the country’s second-biggest cell-phone carrier.

The 61-year-old executive is also a member of China Investment Corp.’s international advisory board.

Born in the U.S., Thornton worked for Goldman Sachs Group from 1980 until 2003, helping to develop its European mergers-and-acquisitions business and serving as chairman of its Asian business.

In October, he appointed Woo C. Lee to a new position — President, China. Woo, who has close ties to the company’s chairman John Thornton, served as a U.S. State Department representative in Asia for about 15 years with postings in countries including China, Japan and Australia and as an adviser to Thornton’s JL Thornton & Co.

Barrick sells 50% in Papua New Guinea unit to China's Zijin

Zijin Mining Group Chairman Chen Jinghe (left) and Barrick Gold Corporation Chairman John L. Thornton (right) signed a strategic cooperation agreement at a ceremony at Zijin’s offices in Xiamen, China on May 26, 2015.