RBC says Acacia (formerly African Barrick Gold) has made significant progress, driving down all-in sustaining costs to below $1,100/oz. and increasing production guidance; for AU, the firm expects the combination of improved operating performance following the placing of the Obuasi mine on care and maintenance, and the likelihood of asset disposals to support a re-rating of the stock.
The Tanzanian government says it will invest at least $1.2B to revamp its ailing state power utility, as the country tries to guarantee reliable power to domestic and industrial consumers.
It expects the reforms to help the country attract enough investments to diversify power sources and boost generation capacity to at least 10K MW over the next 10 years, from the current 1,600 MW.
Around half of the projected new power capacity will be generated from natural-gas fired plants, as a flurry of natural gas discoveries off the southern coast has made the country a hotspot for natural gas exploration, attracting Exxon (NYSE:XOM), Cnooc (NYSE:CEO), Rosneft (OTC:RNFTF) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
Gold mining companies such as Africa Barrick Gold (OTC:ABGLF) and AngloGold Ashanti (NYSE:AU) remain some of Tanzania's largest power consumers.
Barrick Gold's (ABX +1.5%) African Barrick (ABGLF) unit is accused of bribery over cash payments to Tanzanian government officials as part of a process to buy land near its North Mara gold mine, WSJ reports.
An anonymous person says the payments were bribes to officials; ABX and its unit say the payments were not bribes and were legitimate payments for expenses and allowances tied to an agreement with the Tanzanian government.
Barrick Gold (ABX -1%) says it will place ~41M shares of its African Barrick Gold (ABGLF) subsidiary with institutional investors, representing ~10% of African Barrick shares and ~13.5% of the parent's holdings in the company.
ABX says the offering will be made through an accelerated book-build offering process to be launched immediately; the offering has yet to be priced.
ABX, which like many large miners bought pricey assets at the top of the commodity cycle, has been shedding non-core assets and cutting costs.
HSBC cuts its 2014 price target for gold to $1,292/oz. from $1,435 and its 2015 forecast to $1,310 from $1,395, downgrading Barrick Gold (ABX -2.1%), Yamana Gold (AUY -2.6%) and African Barrick Gold (ABGLF, ABGLY) in the process.
ABX may benefit this year from new mine plans which could radically improve near term cash flow, but this likely will come at the expense of reserves and mine life, the firm says in cutting shares to Underweight with a $16.50 price target (from $19.60).
AUY enjoys low average costs but the firm believes this is more than factored in, and cites the relatively small production base and concerns about long-term sustainability of profitability at El Penon in lowering shares to Underweight with an $8.20 target (from $9.60).
Barrick Gold (ABX) confirms Peter Munk will step down from its board at the 2014 annual meeting, expected around April, and co-chairman John Thornton will become sole chairman at that time.
Thornton tells WSJ that ABX will focus on establishing long-term relationships with Chinese partners but has no current plans to sell its Pascua Lama project or its majority stake in African Barrick Gold (ABGLF, ABGLY), two sources of trouble for the miner in recent years.
Thornton also says ABX would consider increasing its exposure to copper and silver over time, depending on the price of those metals, dampening rumors that the company wants to sell out of its copper projects.
More on Barrick Gold (ABX +1.4%) at the Denver Gold Forum: Jamie Sokalsky says the miner is in talks on further asset sales, especially mines that are relatively high cost, have shorter mine lives and limited opportunity to expand through exploration; some of its remaining assets in Australia fit that profile, the CEO says. (earlier)
Though some analysts have suggested ABX should spin off assets instead of selling them into a tough market, Sokalsky says more spinoffs are not on the agenda, due to tax considerations and administrative requirements.
On African Barrick (ABGLF.PK, ABGLY.PK), Sokalsky says he is focused on improving operations there and not on a quick sale, and that ABX does not have a timetable for selling its stake.
Barrick Gold (ABX +0.5%) plans to cut regional managers and move oversight of operations to its head office, in a restructuring designed to make mines more accountable for controlling costs and increasing cash flow, FT reports.
Gold miners around the world are cutting costs and rethinking expansion plans as falling gold prices this year have made many mines unprofitable; ABX already has cut one-third of head office staff, cut $2B from its capital budget for this year, sold mines in Australia and will look at further sales or closures as it focuses on its largest, lowest-cost mines.
As ABX retrenches, talk of divesting its 74% stake in African Barrick (ABGLF.PK, ABGLY.PK) is coming up again; CEO Brad Gordon says the company could be independent in 12-18 months if ABX seeks a sale, but "they are not sellers at the current price."
Even as gold mining stocks are poised for a third straight year of losses, Citi analysts say it could get worse, with companies likely to "struggle to make ends meet" after failing to pass on benefits from the past four years’ heyday in gold to shareholders.
Citi recommends investors play it safe with companies that can adapt to a lower gold-price environment, such as Buy-rated ABX and Medusa Mining (MDSMF.PK); it tags Sell ratings on Harmony Gold (HMY), African Barrick (ABGLF.PK) and Polymetal (POYYF.OB).
Barrick Gold's (ABX -1.8%) African Barrick subsidiary is sued in a U.K. court by a group of Tanzanian villagers who allege the miner was complicit in the killing of six locals by police over the last three years as they looked for gold at or around the North Mara mine.
The news comes as ABX looks to sell its controlling 74% stake in African Barrick amid a declining gold price and high debt burden.
Nomura thinks gold prices have reached a near-term equilibrium, making it a good time to try for a bounce in gold mining stocks (GDX). As a result, its analysts upgrade Randgold (GOLD -6%) to Neutral from Reduce, African Barrick to Buy from Reduce, and Polymetal to Buy from Neutral. But the firm doesn't expect the good times to last, as it sees sellers dominating again by Q4 and sending gold prices down.
As cheaper gold makes South African mines unprofitable to operate, Goldman Sachs slaps Sell ratings on AngloGold (AU -1.2%) and Sibanye (SBGL -5.1%) due to their high exposure to the country. The firm also thinks attempts to reduce costs by reducing labor or closing mines could be met with strikes or government interference. Goldman's best rating - Neutral - is saved for Randgold (GOLD -0.2%).
Gold miners (GDX) have been smacked by plunging gold prices, but Citigroup and HSBC think they have further to fall. Citi worries about AngloGold (AU) because negative free cash flow would hit its "already stretched balance sheet," but Harmony Gold (HMY) has the balance sheet to weather similar problems; Gold Fields (GFI) is its sector favorite. HSBC cuts GFI, Agnico Eagle (AEM) and many others.
"The next fad is going to be the unbundling of the majors," says Randgold Resources (GOLD) CEO Mark Bristow, as the spend-happy gold miners now look to shed assets. Some hope for an unbundling of value similar to that of the oil majors spinning off their refinery and other assets. Keep an eye on John Paulson's efforts to break-up AngloGold (AU). GDX -19.3% YTD.