Barrick’s quest for greater relevancy.
Under the heading “Taking Barrick ‘Back to the Future’” Barrick Gold touted a plan to transform itself into a leaner, meaner cash machine with management and operational changes along with debt reductions in its forth quarter overview. Most who were around in the 1980s will get the movie reference at play. Back to the Future was a trilogy of movies that features Marty McFly, played by Michael J. Fox, who rides a time machine built into a DeLorean DMC-12 car, famously featuring gull-wing doors, to make his and his family’s present better than the past.
The nut of the first and subsequent movies is that things have not turned out as they should have, or as McFly would have them turn out. The first movie is about McFly and Doc Brown, played by Christopher Lloyd, going back to the 1950s by accident, and then their subsequent attempts to get back to the future (i.e. the 1980s) harnessing the power of lightning to run the DeLorean which, depleted of fuel, needs lots of energy to time travel. In the process, McFly rights – or rewrites – history for his family.
He helps his Dad, in a moment of confrontation, upstage Biff and save Lorraine from the then teenage bully’s advances. Soon thereafter McFly returns to the future – or the present 1980s. And what he finds is nicer than what he previously knew. His dad is no longer a loser and his mum is happy. Biff is a deadbeat.
So Barrick. Its view is that it used to be a better company. Barrick’s DeLorean trip – Thornton as McFly going back to the 1980s in this case – is about regaining aspects of a corporate culture more committed to driving its growth or maintaining its position as the world’s premier gold miner by being nimbler on its feet. McFly made sure his Dad didn’t become a loser. Thornton wants to do something similar for Barrick.
Barrick may mine the most gold, but it still lags the market cap of the other major Canadian gold major, Goldcorp, that does about half the amount of Barrick’s production but is generally viewed to have a better growth profile, something that is easier to achieve the farther down the food chain a miner finds itself.
Now, in issuing this Back to the Future plan, it must be said there was a triumph for Barrick. It released what amounted to a short and direct manifesto on how the company has, and would, right itself on a day the price of gold did largely nothing. Yet Barrick gained five or so percent, or around $1 billion in market cap, largely owning to its words.
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