As it continues to deal with repercussions from an ill-fated copper deal in Africa, don’t expect Barrick Gold Corp. to rush into any major mergers and acquisitions deals any time soon.
“When times are good, companies overpay for mediocre assets and invest in projects with low returns,” said executive chairman John Thornton in a webcast to investors on Thursday.
“At Barrick, this will not happen. We are putting in place the discipline to make certain this is the case.” Mr. Thornton said that Barrick had examined a number of external M&A opportunities last year, but passed.
Barrick is attempting to make up for a significant M&A misstep from the past. In 2011, Barrick paid US$7.3-billion in cash to buy Equinox Minerals Ltd., whose chief asset is a Zambian copper mine.
The acquisition, which coincided with a global plunge in commodity prices, proved to be a financial disaster. Less than two years later, Barrick wrote down the value of the assets by US$3.8-billion.