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On the eve of the first full meeting of Barrick Gold Corp.’s new board, investors are in the dark about the gold giant’s strategy.
Barrick’s new chairman John Thornton said he wants the miner, the world’s biggest gold producer, to be the “leading gold company” and a “leader” in copper. But what that means is unknown.
“I don’t think they have been clear, and I don’t think they have made up their minds yet,” said Michael Sprung, president of Sprung Investment Management, which has held Barrick shares for about five years.
The miner’s game plan has come under scrutiny after Mr. Thornton got rid of the company’s chief executive role. Instead, the company will have two co-presidents and the company’s chief financial officer will work closely with Mr. Thornton to develop strategy, he said. Barrick CEO Jamie Sokalsky will be leaving in September, just two years into his tenure.
The management shakeup will lead to further changes at Barrick, which is already in flux after a turbulent year. Directors who had served on the board with former chairman and founder Peter Munk since the beginning faced pressure to leave, and merger talks with Colorado-based gold company Newmont Mining Corp. blew up, with each side blaming the other for the collapse.
The co-presidents’ first major task is to conduct an analysis of Barrick’s 17 mines, a process that is expected to take between three to six months. The mine assessment started under Mr. Sokalsky, who was appointed as CEO and given the task of cleaning up the mess. The company sold assets, raised funds to pay down its debt, suspended projects and shrank its production.
Shareholders are anxious over whether Barrick will pursue another transformational deal as it did with Newmont, which would have consolidated the two companies’ gold operations in Nevada, or alternatively, whether Barrick will sell its copper assets, which some analysts say is needed to pay down its debt.
“I really want to see their strategy outlined and say, ‘Does it make sense to continue to hold the stock?’” said Don Reed, president of Franklin Templeton Investments in Canada. The firm has held Barrick shares for about a decade.
Investors will have to wait until at least the fall for Barrick to unveil a plan. In the meantime, any hint of the company’s strategy will be examined closely.
When Barrick has failed to convey its strategy to the market in the past, its stock has suffered.
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