Barrick Gold's Bulyanhulu mine in Tanzania produced 250,000 ounces of gold last year, not far off London-listed Randgold's main mine, Loulo in Mali, with 350,000 ounces. Bulyanhulu has the highest-grade ore of any Barrick mine outside of the US, implying high profitability.

But like BHP Billiton, another Zeus of the mining world, Toronto-based Barrick looks down from the heights and its Tanzanian assets appear small.

Barrick has decided that Bulyanhulu and three other producing Tanzanian gold mines will make more sense as the largest gold producer in London rather than the smallest piece of its global portfolio. The four mines are being spun off and offered to the London market as African Barrick Gold. The initial public offering is in the process of being priced in a range between 550p and 650p a share.

After the books close on March 18 African Barrick could become London's newest FTSE 100 mining company, offering London investors a "safe way to play gold with the backing of a tier 1 gold company," said Jonathan Guy at Investec.

The African Barrick IPO answers the needs of its parent as much as the needs of a London market curiously short on gold miners.

Barrick's gold production has been declining since 2006. Its main problem is the need to ensure that every ounce mined is replaced by an expanding reserve base.

The spin-off company, with a Barrick-appointed management team, is one way to speed development of mines that otherwise might come last when funds are handed out from Toronto. African Barrick enters the world with its own budget, no debt, $280m (£184m) in cash, and an order from Aaron Regent, Barrick chief executive, to expand production either organically or through acquisition. The aim is 1m ounces a year by 2014.

The new company's four mines produced 716,000 ounces of gold last year. But that "hardly moved the dial", said one banker close to the company, when compared with Barrick's 2009 total production of 7.4m.

Lost within the Barrick empire, the assets were never valued properly, said a London gold mining analyst. "The value that the market gave Barrick group for the [Africa] assets was an order of magnitude smaller than what they get from South America. You are looking at a 5 to 7 per cent return on capital only."

Mr Regent told the Financial Times he had no intention of replicating the spin-off model in Australia or other smaller Barrick regions. This may be because the group receives a higher value lift from these assets. The idea of floating African assets in London, Mr Regent added, is unique partly because "investors here know and like Africa."

This sentiment is supported by the valuation of Randgold, the only major African gold miner listed in London, which trades at 38 times forecast 2010 earnings. This compares with a multiple of 10 times for Petropavlovsk, a Russian miner and its nearest peer.

African Barrick is seeking a higher rating than Barrick's valuation of 14 times earnings. Two London miners give it reason to expect a higher rating: Randgold and Fresnillo. Mr Guy at Investec said African Barrick was unlikely to achieve Randgold's premium rating. "You need a track record like Mark Bristow's to justify it," he said, referring to the chief executive who has built Randgold from scratch and met all his production targets.

A more realistic aspiration may be Fresnillo, the London-listed Mexican silver mining company spun off from Peñoles, the industrial group, in 2008.

Like Barrick, Fresnillo came to London with producing assets, a growth story, experienced managers, and the financial backing of a venerable parent. Fresnillo's valuation is 23 times 2010 earnings.

However African Barrick performs, it will renew the trend of foreign majority-owned mining companies coming to London. Barrick plans to keep a 75 per cent stake in the group.

Mr Regent addressed concerns some investors have with such companies, namely that the shares in circulation are in short supply and therefore illiquid. "We are not wedded to a 75 per cent holding," he said, adding the group would consider diluting if it helped African Barrick grow.