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Barrick, Goldcorp take massive Q4 writedowns amid weak gold prices.
Barrick Gold Corp. chairman John Thornton’s message to Bay Street came through loud and clear: he wants to take the world’s largest gold producer back to its roots as a smaller company with fewer mines and micro-managers — and hopefully return it to profitability.
To that end, the Toronto mining giant is slashing staff at headquarters by nearly half and selling two Asia-Pacific mines. It will be “laser focused” on reducing its debt by $3 billion this year amid rocky times in the mining industry and a weak gold price, he told analysts on a conference call Thursday.
It wasn’t a banner day for either of Canada’s two largest bullion miners, as Vancouver-based Goldcorp Inc. reported a loss of $2.4 billion (U.S.) in its latest quarter as it wrote down the value of its Cerro Negro mine in Argentina. Barrick also reported a massive $2.85 billion fourth-quarter loss due to an after-tax impairment charge on its soon-to-be closed Lumwana copper mine in Zambia and the Cerro Casale project in Chile.
Gold miners are struggling as the gold price has lost 35 per cent of its value since its peak of $1,900 (U.S.) an ounce in 2011 and as the industry suffers through a brutal downturn following a 13-year market rally.
“When companies falter, it is usually because they’ve forgotten their original DNA — that is to say, what it is that made them distinctive and gave them their purpose and values and made them successful,” said Thornton, who has steered clear of quarterly conference calls since taking the helm from Barrick founder Peter Munk last April.
“We believe the only way to recapture that is to consciously go back to the future and understand who we were, what made us distinctive, what gave us our purpose and our values and reinterpret that for the 21st century,” he said of the firm that began with one mine in 1983.
The former Goldman Sachs banker detailed his plan to make the company more “lean and nimble with less bureaucracy” by cutting jobs at its Toronto head office from 260 last year to 140 in 2015. Since taking the helm, he eliminated the chief executive position and has shaken up the top ranks by replacing nearly every other executive.
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