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TORONTO, Nov 1 (Reuters) - A massive public share offeringfrom Barrick Gold Corp has met with sluggish demand,market sources said on Friday, with the shares of the world'sbiggest gold producer falling below the offer price.
Barrick said late on Thursday it would issue more than $3billion worth of common shares in a bought deal to pay down partof its large debt load. The shares are priced at $18.35 each.
"I don't think this has gone really well at all," said onetrading source who asked not to be named. "There's a good chancethe stock will continue to work its way lower."
Just before noon, Barrick's New York-listed shares were justabove $18.00, down 7 percent. It was not clear how much of theoffering the banks had been able to sell before the shares,which closed at $19.39 on Thursday, dropped below the offerprice.
Shares of precious metal miners were broadly lower onFriday as the gold price fell to a three-week low.
The offering followed news early on Thursday thatToronto-based Barrick would temporarily shelve its massivePascua-Lama mine project. The gold-silver mine, being built highin the Andes on the border between Chile and Argentina, had beena key growth project for Barrick, but also a drain on its cashreserves.
The weak reception for the share offering will have noimpact on how much Barrick receives, but could hurt the deal'sunderwriters, led by RBC Capital Markets, Barclays and GMP Securities LP.
In a bought deal, underwriters commit to purchase the entireoffering from a client and then resell it. If they resell sharesbelow the offer price, their margins take a hit, and they couldeven lose money on the deal.
RBC and GMP could not immediately be reached for comment.Barclays declined to comment.
The fall in Barrick's Toronto-listed stock on Friday - downC$1.41 at C$18.87 - was the biggest drag on Canada's main stockindex, the Toronto Stock Exchange's S&P/TSX composite index.
($1=$1.04 Canadian) (Reporting by Allison Martell and Euan Rocha; Editing by PeterGalloway)
