ABX selling 163 million new shares tonight

s4ny

Barrick Gold (ABX) announced after the close today, that the company is selling $3 billion in new shares to
reduce debt. RBC and Barclays are handling the sale.

derryb

A sign of financial weakness?

roadrunner

Those guys are pretty heavy in debt with a 1-1 Debt/Equity ratio. They just announced they will not put any more money in the huge Pascua-Lama project until the market is much different. That could be years.
They have flushed $4.5 BILL into this project so far....about 25% of their current market cap. They were counting on all those gold and silver ounces in 2014 on forward. Another big project bites the dust for an
indefinite period.

vpr

Good news for me. These stocks should be cheaper next year. Mining companies aren't going anywhere. There will be a terrific opportunity to make money in these stocks. I'm very tempted to go 100% mining stocks in my Roth IRA, next year. Every other sector seems overvalued at this point. Looking at IAG, ABX and NEM. Thinking 50% IAG and 25% each of ABX and NEM. Or maybe I'll do a silver miner for 25% instead of NEM.

cohodk

ABX down about 6%. If the US mint were to release 163 million ASEs would the price drop and how long would it take to sell them?

roadrunner

<< <i>ABX down about 6%. If the US mint were to release 163 million ASEs would the price drop and how long would it take to sell them? >>




163 MILL ASE's would be around 45-50% of the total ever minted for all years. Since this is primarily a US market, it's premium should shrink drastically. This is not what we're really talking about. So this more about dumping a crap load of silver on the market in one shot. Barrick on the other hand is a company with world wide demand.

This amount is approx 1/6th of world silver production....or about 2 months worth. It would be equivalent to dumping 450 tonnes of gold on the market in one day. We already saw the effect of dumping 450 tonnes of "gold" over 3 days back in April. That dropped the gold price approx $270/oz or about 17%.

Barrick just did a 1/6th or 16% market cap dilution/debt increase. Yes, a very large change. But Barrick is but one of many miners in the world. And its operations are widely dispersed around the world. We aren't diluting all miners by 16%, just one company. The affect to Barrick is somewhat buffeted (for now) by all the other miners out there. Barrick falling to $16/share would end up being a 16% pull back. Whether it gets there depends on where gold goes over the next month, not so much what Barrick does. Barrick already got severely punished by the Pascua-Lama deal months ago to $13/share which may have been well overdone. It's getting punished for the same thing again (double jeopardy?). The company pulls in over a BILLION in operating cash each quarter. There are US tech companies out there with little to no cash flow and a similar or bigger market cap to Barrick and an equivalent or higher share price.

As far as the orig question? 163 MILL ASE's could probably be sold in one week if you wanted to sell to some big hands in the silver market without the usual ASE premium. As ASE's carrying a hefty premium it could take years to sell them. The new Barrick shares will all be sold before the year ends. But, the share price is already about 2% under the offering price. Are the 3 underwriters on this offering that dumb to risk tens to hundreds of MILLIONs in losses if the share price continues to crater? Or does the offering just never go to completion?