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Glencore exploring sale of $2bn Kazakh gold mine

May 03, 2016, 4:49 PM EDT
(Source: O.B.1/flickr)
(Source: O.B.1/flickr)

Glencore is exploring the sale of its $2 billion gold mine in Kazakhstan.

Reuters reports:

Mining company Glencore is considering selling its Vasilkovskoye gold mine in Kazakhstan, sources close to the deal said on Tuesday, confirming an earlier report in the Financial Times. The sources said the assets were worth more than $2 billion. "A sale is one of the options," one source said, speaking on condition of anonymity. Two other sources said the assets were on offer and all three sources said Glencore had appointed Deutsche Bank and BMO Capital Markets as advisers. Along with other big mining companies, Glencore is looking to sell assets to reduce high levels of debt following a plunge in commodity prices and a fall in Chinese demand for raw materials. Quoting people familiar with the sale process, the Financial Times said Chinese miners were expected to lead the charge to buy the assets following a rebound in gold prices. One of the sources told Reuters it was far from certain there would be a deal. "There's a very small field of buyers. None of the Western groups will touch it because it's based in Kazakhstan," the source said.

The Wall Street Journal notes:

The sale of Glencore’s 70% stake in the mine would help the company pare down its near-$26 billion net debt load. Earlier this year, Glencore agreed to $1.4 billion in so-called streaming deals to deliver gold and silver from mines in Peru. In April, Glencore agreed to sell a 40% stake in its agricultural business to Canada’s largest pension fund for $2.5 billion in cash. The deals are in line with Glencore’s aim to raise money from asset sales to help reduce its debt after the company stock price plunged last year amid a selloff in commodities. Investors were concerned that if commodity prices kept falling, Glencore would have trouble servicing its debt. In response, Glencore in September slashed its dividend and announced that it planned to cut its debt by more than $10 billion.

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