RPT-UPDATE 2-Barrick ends talks to sell African unit to Chinese buyer
(Repeats to additional Reuters clients)
China Natl no longer in talks to buy African Barrick stake
* Barrick Gold says approach "prudent and disciplined"
* Says will only look at deals generating acceptable value
* African Barrick shares slump 21 pct
* CEO says Q4 results will be "reasonably positive"
(Adds African Barrick CEO comments, analyst comment, share price)
By Sarah Young
LONDON, Jan 8 (Reuters) - Barrick Gold Corp has ended talks to sell a stake in majority-owned African Barrick Gold to a Chinese buyer, dashing hopes of a potential $3 billion deal for the underperforming unit.
Canadian mining major Barrick Gold, which owns 74 percent of London-listed African Barrick, had said in August it was in early-stage talks with state-owned China National Gold about the possible sale of all or part of its stake.
Shares in African Barrick slumped 21 percent to 353 pence in early trading to hit their lowest level for five months, on disappointment that the Chinese would no longer be offering an exit from a stock which has frequently traded well below its 575 pence listing price set in March 2010.
The termination of talks over what could have been one of China's largest mining deals in Africa - if China National Gold had opted to buy the whole of African Barrick the deal would have been worth around $3 billion - could suggest China is becoming an increasingly tough negotiating partner.
Chinese companies made a string of deals in gold miners in 2012 as the country's demand soared for bullion, sought for jewelry and as an inflation hedge, and it had been increasingly seen as a deep-pocketed investor.
"We are approaching this in a prudent and disciplined manner and will only proceed with opportunities that generate acceptable value for Barrick," Barrick Gold Chief Executive Jamie Sokalsky said in a statement on Tuesday.
China National Gold declined to comment on the ending of discussions.
Barrick, the world's largest gold producer, reiterated it was evaluating all of its portfolio as it grapples with falling profits and soaring costs, suggesting the sale of its African Barrick stake could still occur.
African Barrick said in a separate statement that its management would carry out a review with the aim of improving returns from its projects, primarily based in Tanzania.
Analysts said African Barrick's downgrading of its 2012 production forecast in October, during China Gold's due diligence process, would likely have hindered discussions on price between the company's parent and suitor.
"The likelihood of a China National Gold bid was the key driver of our 'buy' case. Now that this appears to have subsided, focus will turn back to the operational performance of the business," said Nomura analysts.
Since being listed, African Barrick has lagged expectations, suffering setbacks ranging from villagers armed with machetes invading a mine to power woes and fuel thefts.
Analyst Dmitry Kalachev at brokerage Canaccord said African Barrick's review of its operations was needed. Since the company's IPO, "they've never actually met their production guidance, so 2013 will be a test for them," he said.
African Barrick Chief Executive Greg Hawkins said in an interview the company would report a "reasonably positive" fourth-quarter performance. Figures are due on Jan. 17.
Hawkins said the review of the business will involve looking closely at production costs which had soared in the third quarter, a problem faced by much of the gold mining industry.
Hawkins said he saw the company's Bulyanhulu project as a key focus for investment, but declined to be drawn on whether the review could result in the sale of other assets.
"I think that's pre-emptive of me to speculate on," he said.
African Barrick said it planned to maintain its dividend at the 2011 level, when it paid out a total of $67 million or 16.3 cents per share.
(Additional reporting by David Stanway in Beijing; Editing by Kate Holton and David Holmes)