Barrick Gold’s John Thornton won’t back down – by Eric Reguly (Globe and Mail – September 15, 2018)

John Thornton will tell you he saved Barrick Gold Corp. from certain destruction and set it up for fresh success. The company’s shareholders are not convinced. To many of them, Barrick looks like the incredible shrinking company. Who is right?

Mr. Thornton, executive chairman of the world’s biggest gold company since 2014, and a former Goldman Sachs Group Inc. president, is utterly convinced his overhaul of Barrick has changed the Toronto company for the better – even though its shares have dropped almost 40 per cent in the past year alone and are down by more than half since their most recent peak, in 2016.

In an exceedingly rare interview – this is one boss who avoids the media – he is coming out of his shell to defend a turnaround strategy that seems to have alienated investors rather than please them. “Chasing ounces,” as he puts it, is not his strategy. His plan is to recreate Barrick as a gold company that does not operate like a gold company, while inviting big-name Chinese miners to invest in Barrick projects.

To him, growth does not necessarily mean more reserves, mines and production; it means more free cash flow – the money left over after the company pays its operating bills and capital expenditures. When free cash flow expands, so does the company’s ability to invest in new projects and dole out riches to shareholders.

His plan has, so far, substantially reduced the size of the company by getting rid of the second-tier mining properties. His problem is that Barrick’s share register is still loaded with the investors he doesn’t view as ideal – traditional gold investors – and they do not seem to be buying the free-cash-flow pitch. They wince when they see mines being sold and reserves going in the wrong direction.

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