Barrick CEO Says Cuts to Take Miner Beyond Where Thornton Could – by Danielle Bochove (Bloomberg News – February 13, 2019)

(Bloomberg) — Mark Bristow, known throughout the gold industry for his relentless focus on costs, is counting on his belt-tightening skills to take Barrick Gold Corp. to the next level.

“John really drove this business on multiple fronts, but his primary focus was the debt,” Barrick CEO Bristow said Wednesday in an interview at Bloomberg’s Toronto office, referring to the miner’s executive chairman, John Thornton. “He really pushed the envelope on cash flow.”

The “easiest’’ way to manage cash flow is to increase the grade of the gold being mined, Bristow said. “You go to the high-grade zones, and you mine them, and you get your cash flow.” However, that approach has its limits; the next step is to cut costs sufficiently that lower-grade gold becomes profitable — which also boosts reserves, he said.

Last year, Barrick backed away from a goal, announced in 2016, of reducing all-in sustaining costs to $700 an ounce, citing inflation and falling production as headwinds. Now that Barrick has completed its $5.4 billion merger with Randgold Resources Ltd., Bristow said there is “every indication” that the new company’s costs can move toward that goal.

Barrick, which released 2019 guidance on Wednesday along with its final fourth-quarter earnings as a stand-alone company, will provide more clarity on its five-year cost outlook later this year. But efficiencies at some of its top assets — its mines in Nevada and Pueblo Viejo in Dominican Republic — will drive the improvement, he said.

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