Barrick Gold's African mines are out and trading on their own after the company completed an initial public offering for African Barrick, and the price is telling because it shows just how much discount investors demand for risk on that continent.
Barrick Gold is trading at a multiple of 1.6 times net asset value, according to National Bank Financial analyst Tanya Jakusconek, while the IPO of African Barrick puts its NAV multiple at 1.1 times.
To be sure, the National Bank analysts point to the fact that the African assets get an additional discount because Barrick still holds a big stake.
Even so, the big multiple gap goes a long way to explain Barrick's decision to spin out the African assets, which should remove a significant drag from the parent company.
This, combined with the decision to take out the parent company's last remaining hedges, shows how management at Barrick is finding ways to unlock bits of value for shareholders, which becomes increasingly important given the price of gold has stalled after a big run.