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Canada's Barrick Gold acquires nine per cent stake in Celtic Resources

Canada's Barrick Gold acquires nine per cent stake in Celtic Resources < News < Bet On Markets

MOSCOW (AP) — Canada’s Barrick Gold Corp. said Thursday it was acquiring a nine per cent stake in London-based Celtic Resources Holding Ltd., in a deal that potentially gives the Canadian gold giant major clout ahead of next year’s auction of Russia’s biggest gold deposit.

The $28 million US deal gives Toronto-based Barrick, one of the world’s largest gold producers, the right to put two members on Celtic’s board. More importantly, however, the deal lays the groundwork for another deal that would put Barrick at a major advantage going into the eagerly anticipated auction of Russia’s Sukhoi Log deposit.

One of the largest untapped gold fields in the world, Sukhoi Log has some 22 million troy ounces of reserves and its auction will be closely watched by gold investors worldwide, according to Russian investment group Troika Dialog.

"For Celtic this strengthens their negotiating position, said Vasily Nikolayev, an analyst at Troika. «Everyone is waiting for the negotiations to close with Alrosa. This will be a very powerful alliance.»

The deal, announced Thursday by Barrick president and executive director Greg Wilkins, gives Barrick the option to purchase 51 per cent of another Russian gold deposit-the 8.1 million troy ounce Nezhdaninskoe field.

Celtic owns 50 per cent of the Nezhdaninskoe field and is negotiating to acquire the other half from Russia’s diamond mining monopoly, Alrosa.

Alrosa is expected to swap its share in Nezhdaninskoe and other gold fields interests for a stake in Celtic.

That would give Celtic essentially three owners — Barrick, Alrosa, and Celtic’s current owners — and give the venture huge financial clout in bidding for Sukhhoi Log.

Analysts predict Barrick’s acquisition of the Celtic stake will speed those negotiations.

Wilkins also said the deal will complement Barrick and its only current Russian project — a 17 per cent stake in Highland Gold Mining Ltd., an international gold miner with properties in Russia.

«The deal with Celtic complements our investments in Highland Gold since both companies presently work different geographical regions,» Wilkins said in a statement.

The lure of Russia’s gold fields is strong: the Soviet Union spent millions of dollars on their geological exploration, meaning most of the hard work has been done for prospective developers.

Alex Nicholson
Canadian Press

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