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Barrick Gold says three workers killed in mine collapse in Tanzania

by KRISTINE OWRAMThe Canadian Press
March 17th, 2010

TORONTO - A unit of Canadian mining giant Barrick Gold Corp. has suspended operations at a mine in Tanzania after three workers were killed in a cave-in, one week before shares in the spin-off company are expected to begin trading on the London Stock Exchange.

African Barrick Gold said the workers died when part of the Bulyanhulu mine collapsed on Tuesday. The mine employs 1,445 workers and is a major employer in the central east African country.

The company is investigating the cause of the collapse, and will keep the area of the rock fall closed until the "incident has been investigated, the cause understood and any appropriate action taken," Barrick said.

Operations at the mine will be suspended for a period of mourning on Thursday. Dickson Kadelema, Vedastus Wilfred Tandise and Joel M. Nicholas were killed.

The mine collapse is the second piece of bad news for Barrick in under a week. On Sunday, more than 300 employees of the company's Pueblo Viejo joint-venture project in the Dominican Republic were hospitalized with food poisoning after eating food provided during an overnight shift at the mine.

However, analysts say it's unlikely the incidents will have much impact on Barrick's reputation, operations or the planned initial public offering of shares in African Barrick Gold, scheduled for March 24.

"It's unfortunate, but underground mining is fraught with risk and companies and individuals can take precautions, but accidents do happen. So will it affect the IPO? Unlikely," said John Ing, a gold analyst and president of Toronto-based investment dealer Maison Placements.

Ing added that Barrick is known as "a very good operator" with a good safety record. The most recent fatality at the Bulyanhulu mine was in 2006, and last year the mine's safety record earned it a national award from the Tanzania Occupational Safety and Health Authority. According to the company's website, employees at the mine received 156,000 hours of health and safety training in 2008.

Barrick's stock price was unaffected by the incident, falling five cents to $40.59 in afternoon trading on the Toronto Stock Exchange.

"It's a very unfortunate accident, but Barrick has such a diversified asset base with production coming globally that halting one operation for a short period of time really doesn't have much of an impact (on the stock price)," said Haytham Hodaly, an analyst with Salman Partners.

The Tanzanian mine is one of four involved in a spinoff of Barrick's African operations into a new publicly traded company. Barrick will continue to own 75 per cent of the new company, with the other 25 per cent sold to investors through the IPO.

Assets of African Barrick Gold will include the Bulyanhulu, Buzwagi, North Mara and Tulawaka mines in Tanzania as well as a number of exploration properties and projects. As of the end of 2009, the proposed new company had total reserves of 16.8 million ounces of gold and was expected to produce between 800,000 and 850,000 ounces in 2010.

Besides its African assets, Barrick owns and operates gold mines in Canada, the U.S., Peru, Argentina, Chile, Australia and Papua New Guinea.

In its most recent quarter, Barrick reported net income of US$215 million or 22 cents per share. This included a $241-million charge related to the elimination of its gold hedges, and reversed a year-earlier net loss of $468 million or 54 cents per share. The year-ago results included a $773-million writedown of the value of some of the company's smaller mines.

The company's sales increased to $2.358 billion in the quarter, up nearly 13 per cent from $2.094 billion a year earlier.


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