Barrick sells 50% of Zaldivar for $1 billion cash

Top gold miner Barrick Gold on Thursday announced the sale of a 50% stake in its Zaldivar copper mine in Northern Chile to London-listed Antofagasta Plc for a shade over $1 billion in cash.

A number of well-known mining companies including BHP Billiton (ASX:BHP) which operates the nearby Escondida mine, Canada’s Teck Resources (TSX:TCK, NYSE: TCK), Hudbay Minerals (TSX:HBM) and China Molybdenum Co were said to have been in the running and the family-controlled copper miner's bid came as something of surprise.

Antofagasta, which last year produced 705,000 tonnes of copper and 270,000 ounces of gold, and Barrick will operate Zaldivar as a joint venture. The deal is expected to close before the end of the year.

Barrick has off-loaded assets worth $800 million this year including Cowal mine for $550 million in cash and $298 million for its Porgera mine, as it comes to terms with a $13 billion debt load.

Zaldivar, an open-pit, heap-leach mine, produced 222 million pounds of copper in 2014, according to Barrick’s website.

Proven and probable copper reserves from the mine as at Dec. 31, 2014, were 5.56 billion pounds. Production costs last year were US$1.65 a pound and they are increasing as head grades fall.

Barrick Gold Corp (NYSE:ABX, TSE:ABX) was trading up slightly in after hours trade in New York on the news following a 2.7% decline during regular trading.

Barrick's market value has decline 45% just over the last three months and is now worth $8.4 billion in New York.

That compares to a $64 billion capitalization when gold was at $1,900 in 2011. Barrick's gold production is expected to fall to between 6.2m – 6.5m ounces as it disposes of underperforming assets.