Boston, MA 07/15/2014 (wallstreetpr) – Barrick Gold Corporation (USA) (NYSE:ABX), a mining company that is undergoing slimming to reduce its financial burden, announced a joint venture to run its Jabal Sayid copper mine in Saudi Arabia.
The partnership becomes the first for Barrick Gold to enter since installing John Thornton as its CEO earlier this year.
The mine is located some 120 kilometers southeast of Medina, west of Saudi Arabia.
Although the companies have already obtained the approval of the ministry of petroleum and mineral resources as required for such transactions, the deal is still subject to customary closing conditions. If all goes as planned, the joint venture between is expected to close in 4Q2014.
50 percent stake
Barrick Gold Corporation (USA) (NYSE:ABX) entered a partnership with Ma’aden, a Saudi Arabian mining company with extensive experience in the kingdom’s mining sector. Under the partnership arrangement, Ma’aden will acquire 50 percent stake in the Jabal Sayid underground copper project for $210 million.
Barrick Gold (NYSE:ABX) acquired the Jabal Sayid mine in 2011 through the purchase of Equinox Minerals Ltd. The acquisition also helped the Toronto-based mining company to gain control of the Lumwana copper mine in Zambia.
Work at Jabal Sayid mine has been delayed because of regulatory challenges in the kingdom. However, the mine is expected to yield 60,000 tons of copper concentrate on a yearly basis for the first five years of operation.
The companies expect the joint venture to offer benefits to the local communities in terms of employment, economic development and training. Jabal Sayid is viewed as a high-quality and low-cost copper project that is capable of generating significant free cash flow.
Barrick Gold Corporation (USA) (NYSE:ABX) will provide its superior technical and operating expertise in the copper project while Ma’aden is expected to leverage the project with its deep understanding of Saudi Arabia’s mining industry. That combination is expected to help the company realize smooth running of the mine.