Ex-Goldman Banker Emerges as Barrick Gold Dealmaker – by Liezel Hill and Christopher Donville (Bloomberg News – April 22, 2014)

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A week before Barrick Gold Corp. (ABX) Chairman Peter Munk retires, his successor John Thornton is emerging as a dealmaker as the former Goldman Sachs Group Inc. banker pursues a bid to combine the two biggest gold miners.

Negotiations between Barrick and Newmont Mining Corp. broke off last week amid minor disagreements while leaving open the possibility that discussions could still resume, two people with knowledge of the matter said April 19.

The deal under discussion would have seen Thornton become executive chairman of the combined company while the chief executive officer would have been Gary Goldberg, who currently leads Newmont, the people said. Toronto-based Barrick’s CEO Jamie Sokalsky would have led a smaller gold producer spun off from the merged company, according to the people.

The proposed tie-up and its management reshuffle confirm Thronton’s elevation as Barrick’s most senior executive. The 60-year-old, who had no role in the mining industry until he joined the company’s board just over two years ago, is set to succeed Munk, Barrick’s 86-year-old founder, as chairman at the annual shareholders meeting next week. Leading a successful acquisition of Newmont (NEM), in what would be the biggest gold takeover, would set up Barrick to do further deals, including ones involving other commodities.

Long-Term Strategy

“I think if anybody has the skill to drive this transaction through, whether or not it is successful from an operational standpoint, I think he certainly has the leadership,” said Michael Sprung, president of Toronto-based Sprung Investment Management Inc., which owns Barrick shares. “It’s a merger to set them up for bigger, future M&A deals which may in fact include an element of diversification.”

Spokesmen for Barrick and Newmont both declined to comment on last week’s talks. Newmont’s shares closed little changed at $25.04 in New York, while Barrick rose 1.8 percent to C$19.37 in Toronto. Gold for immediate delivery fell 0.4 percent to $1,284.58 an ounce.

Thornton spent 23 years at Goldman before departing in 2003. He joined Barrick as an independent director in February 2012 and was hired as co-chairman in June of that year, just as the company fired CEO Aaron Regent following a decline in its share price.

Slumping gold prices and rising mining costs eroded Barrick’s margins, raised concerns about its debt and spurred the company to start selling higher-cost mines. Those divestments have improved the company’s financial flexibility and will reduce its borrowings, Goldman Sachs said today in a note. Goldman raised its recommendation on the stock to buy from hold.

McKinsey Review

As part of Barrick’s senior management, Thornton has helped oversee its long-term strategy. He has looked at establishing partnerships with Chinese companies including China Investment Corp., people familiar with the matter said in December. Thornton’s role also involves developing and maintaining relationships with governments, according to Barrick.

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