By Robb M. Stewart

 

MELBOURNE, Australia--Barrick Gold Corp. (ABX.T) has struck a deal to sell its half of the Kalgoorlie Super Pit mine in the renowned "Golden Mile" region of Western Australia to local gold producer Saracen Mineral Holdings Ltd. (SAR.AU) for US$750 million.

In a statement Monday, Saracen said it has agreed to buy the 50% interest in the Kalgoorlie Consolidated Gold Mines joint venture, which owns the large open and underground Super Pit mine in Kalgoorlie-Boulder. It said Colorado-based Newmont Goldcorp. (NEM) will retain its 50% stake in the venture and would continue as operator of the mine.

The Super Pit is one of the biggest gold operations in Australia, producing an average about 660,000 troy ounces annually over the past five years. However, output in the year through June was 490,000 ounces after the mine was hit by the failure of a pit wall in 2018. Repairs are underway and are expected to take more than three years.

Saracen said the deal will establish it as one of the country's biggest gold producers, adding exposure to a top-tier mine with an estimated reserve of about 7.3 million ounces and options to extend the life of the operation through the resource base and exploration. Saracen's annual output will jump to more than 600,000 ounces from about 400,000 now from two mines in the Kalgoorlie area.

Barrick had been pushing for a sale of the Super Pit as it seeks to offload unwanted mines following the takeover of Randgold Resources at the start of the year.

To fund the acquisition, Saracen said it would raise about 796 million Australian dollars (US$543 million) through the issue of shares and another A$450 million in a new term loan.

"It is an asset Saracen knows well and has admired for many years," Saracen Managing Director Raleigh Finlayson said of the Super Pit.

The deal remains subject only to approval from the Western Australia state government.

 

Write to Robb M. Stewart at robb.stewart@wsj.com

 

(END) Dow Jones Newswires

November 17, 2019 18:45 ET (23:45 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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