1 February 2013

Tanzania: ABG Shares in London Affect Dar Bourse

MARKET capitalisation at the Dar es Salaam Stock Exchange (DSE) has significantly dropped following steep fall of the price of shares of the Londonlisted gold producer African Barrick Gold (ABG).

Share prices of the London-listed ABG nosedived after Barrick Gold Corp said earlier last month, that it was no longer in talks with state-owned China National Gold Corp (CNGC) to sell its Tanzanian assets.

Canadian mining major Barrick Gold, which owns 74 per cent of ABG, said in August it was in early-stage talks with CNGC about the possible sale of all or part of its stake. The stockbrokers in Dar es Salaam told the 'Daily News' that the bourse market capitalisation has gone down by almost 20 per cent reflecting the same amount the ABG share price tumbling down from 444 pence (11,544/-) to 356.80 pence (9,277/-) as of Thursday since the buy-off deal dematerialised.

The ABG market capitalisation sunk to 3.804tr/- yesterday from 4.734tr/- a fortnight ago, plummeting the DSE market capitalisation by 930bn/- from 13.213tr/-, the miner's shares control over a third of total DSE market capitalisation.

The Tanzania Securities CEO, Mr Moremi Marwa, said yesterday that ABG share price has had a negative impact on the DSE's market capitalisation since the deal was put-off. "ABG has a bigger volume, thus its fluctuation on (FTSE 250) London affected the market capitalisation of DSE," Mr Marwa said "even though little trading is happening at the country's bourse."

ABG shares are not frequently trading on the DSE, but its prices kept reflecting what is going on in London (LSE), which is featured on the FTSE 250. International analysts a fortnight ago, projected that the deal may reach over 500 pence a share. But minutes after the market opened in London today, shares dropped over 21 per cent to as low as 347.80 pence, some 96 pence less than Thursday's 444 pence close.

Meanwhile, ABG reported a 16 per cent drop in gold production for the period January to September 2012 as well as 17 per cent fall in sales coupled by a 42 per cent increase in cash cost per ounce compared to the comparable period in 2011. Profit for the three quarters of 2012 was down 58 per cent to 94 million US dollars compared to over 222 million US dollars the year prior.

Copyright © 2013 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.