Barrick Gold Investors Get Answers as Thornton Outlines Strategy – by Liezel Hill (Bloomberg News – February 19, 2015)

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(Bloomberg) — Barrick Gold Corp. investors waiting to hear Chairman John Thornton’s plans for the world’s biggest gold producer finally have some answers.

Barrick will stay focused on gold and has no plans to diversify into other metals, Thornton said Thursday in his first appearance on a quarterly earnings call.

The chairman, who replaced Barrick’s founder Peter Munk in April, said he’s trying to go “back to the future,” returning the Toronto-based company to the nimble, entrepreneurial roots that first made it successful.

The last few years have been tumultuous for Barrick, with the departure of two chief executive officers, a sliding gold price and a tumbling share price. With shareholders looking for reassurance, at least two of them — ASA Gold & Precious Metals Ltd. and USAA Precious Metals & Minerals Fund — have complained that Thornton’s plans for the future weren’t clear.

“After having listened to the call, I do feel better about Barrick and its corporate strategy,” Diana Racanelli, a Toronto-based resources fund manager at Manulife Asset Management, said Thursday. “These have all been key issues that needed to be addressed.”

Barrick intends to become leaner and more decentralized, reducing debt and increasing free cash flow and returns. It’s seeking to cut net debt this year by at least $3 billion, or about 29 percent, it said in its fourth quarter earnings statement late Wednesday.

To achieve that, the company will start a sales process for a mine in Australia and another in Papua New Guinea, seek joint ventures and partnerships and use free cash flow.

Low Profile

Greg Barnes, an analyst at TD Securities in Toronto, said he was “encouraged” by the focus on lowering debt. He raised his recommendation on the stock to buy from hold.

Barrick rose as much as 7.4 percent in and was at C$15.96 at 1:18 p.m. in Toronto trading.

Thornton, a 61-year-old former senior banker at Goldman Sachs Group Inc., has kept a low public profile, previously leaving earnings calls to other executives. He has preferred to engage with shareholders individually, a person familiar with the matter said earlier this week.

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