Barrick Gold Bets Once More on Nevada After Zambian Flop – by Liezel Hill ( – February 15, 2013)

Barrick Gold Corp. is betting growth will come from Nevada, where the world’s largest producer scored its first big success three decades ago, after more than $9 billion in writedowns and cost overruns in the past two years on projects from the Andes to Zambia.

Chief Executive Officer Jamie Sokalsky said yesterday the Toronto-based company doubled the estimated resources at the Goldrush deposit in Nevada last year, even as it sells assets and cuts spending elsewhere to revive shares that slumped 24 percent. Barrick is also pushing ahead with Pascua-Lama, a gold and silver mine on the Chile-Argentina border it expects to open next year.

“The priorities for the company, once we finish Pascua- Lama, really are focused on Nevada,” Sokalsky said yesterday on the company’s earnings call. “We have one of the most exciting exploration finds in recent memory, the Goldrush discovery, to ultimately add to this Nevada production in the future.”

Sokalsky’s mantra yesterday was steady and safe. The CEO, who took the job June 6, said the company has no plans to build more new mines and is looking to sell lower-return assets including its energy unit and the 50 percent it owns in a nickel project in Tanzania.

Shareholders reacted positively to Sokalsky’s moves to do “anything that will increase shareholder value” yesterday, lifting the stock 2.3 percent in Toronto.

‘Looking for Safety’

“Investors are definitely looking for safety,” Adam Graf, a New York-based analyst at Dahlman Rose & Co., said yesterday in a telephone interview. Nevada is “the only place that they’ve been able to execute successfully if you think back to the last several years.”

Fifteen analysts recommend buying Barrick’s shares, while Graf is among 13 analysts that have a hold rating, according to data compiled by Bloomberg.

Barrick declined 1.9 percent to C$31.82 at the close in Toronto. The shares have fallen 8.6 percent this year, compared with a 13 percent decline in the 30-company Philadelphia Stock Exchange Gold and Silver Index, and a 2 increase in the S&P/Toronto Stock Exchange Composite Index.

Barrick’s shares rose yesterday after the company reported adjusted fourth-quarter earnings that beat analysts’ estimates and Sokalsky said the company has received interest from “serious buyers” for its assets.

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