Barrick Gold Corp needs to consider buying big assets again – J.P. Morgan – by Jonathan Ratner (Financial Post – June 16, 2016)

Barrick Gold Corp. needs to “think big” when it comes to acquisitions, with a new report suggesting now is the time to refill its project pipeline to avoid steep production declines in the coming years.

“Barrick is the world’s largest gold miner and – like a supertanker – has to move early to avoid bad outcomes,” John Bridges at J.P. Morgan told clients on Thursday.

The analyst noted that while Barrick’s improving share price could allow it to buy some smaller miners, it also needs to look for large mines, albeit ones that don’t add too much stress from an operational perspective.

“Now is probably the time to think about reserve replacement,” Bridges said, noting that roughly a third of Barrick’s reserves are at projects with no current mine building plans. Even when including the company’s four new projects under study, the analyst projects that gold production will fall into the next decade.

“While 2020 seems distant, the long time line for new projects requires miners to think well ahead or buy assets when opportunities appear,” Bridges said.

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