Barrick Gold Corp. is predicting sharply higher costs and lower grades at a key mine, as well as lacklustre production for 2019, highlighting the challenges the company still faces after its takeover of Randgold Resources Ltd.
The Toronto-based miner, which closed its deal for Randgold on Jan. 1, also booked a fourth-quarter net loss of US$1.2-billion, as it incurred impairment charges at its Lagunas Norte and Veladero mines in Peru and Argentina, respectively.
The Randgold acquisition was designed in part to inject new management talent into Barrick after years of restructuring. New Barrick chief executive Mark Bristow, who came from Randgold, is considered within the industry to be skilled at trimming costs.
(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.
News-Miner opinion: It’s been quite the month for the two companies behind the proposed Donlin Gold project in Southwest Alaska.
It was just over a week ago that the companies — NOVAGOLD Resources Alaska Inc. and Barrick Gold US Inc. — announced that the Donlin Gold project had received two key permits from the state. One, from the Department of Environmental Conservation, is the waste management permit.
The other, from the Department of Natural Resources, approves of the project’s reclamation plan, which is the process the companies will undertake to close the mine and maintain the site at the end of the mine’s estimated life of at least 27 years. For that permit, the companies had to assure the state that funds would be available for the reclamation.
More Australian gold companies may be active in the M&A space this year, perhaps looking at Canadian companies
After Ian Telfer, chairman of Vancouver-based Goldcorp Inc., brokered a $10-billion sale of his company earlier this month to Newmont Mining Inc., he characterized it as one of the first in a series of deals coming to the gold sector.
“It was our sense that the industry was going to consolidate,” said Telfer. “It’s becoming a big company game for people who want exposure to gold.”
His remarks echo those made by a chorus of analysts, bankers and mining executives, who for months have been predicting a wave of mergers and acquisitions is about to hit the gold sector, where too many companies are chasing too few investors.
Barrick Gold Corp.’s new chief executive officer, Mark Bristow, said his company is seeking solutions to a dispute over mining taxes in Zambia.
“We’re engaged with the government in a constructive way,” he told reporters at a press conference in the Ivory Coast’s economic capital, Abidjan. “We don’t believe that threatening one’s partner is a constructive way to go about solving problems.”
Mining companies in Zambia, Africa’s second-biggest copper producer, have warned that the tax hikes will harm the industry and some producers have said they’ll curtail operations as a result of the changes. First Quantum Minerals Ltd. in December said it would cut 2,500 jobs in the country, before backtracking this week on the plan.
Barrick Gold Corp. is opening the door to a sale of its biggest copper mine as it faces higher taxes that threaten its profitability in Zambia.
In a statement on Monday, Barrick said the Zambian government has proposed tax increases for its Lumwana property that would “imperil the mine’s ability to sustain returns to all stakeholders.”
Barrick said reports that it had already sold Lumwana were untrue, but the Toronto-based company allowed that given the “challenging conditions,” it was considering “all options.” The potential sale is an about-face for Barrick, which had previously designated its copper assets as “strategic” and not something it was planning to sell.
David Garofalo seemed to have everything going for him. A polished executive with a strong résumé in mining, he was hired to run Goldcorp Inc. in 2015, giving him control of what looked like a darling in a moribund sector.
Unlike many of its peers, Goldcorp came out of the commodity crash with a favourable view from investors. It had avoided mega-acquisitions. The balance sheet looked good.
Three years later, Mr. Garofalo has lost the confidence of shareholders. Goldcorp’s stock fell by more than half, hit by falling production and rising costs, prompting U.S. gold giant Newmont Mining Corp. to step forward this week with a deal to buy the company for US$10-billion. It’s not certain if Mr. Garofalo will have a job at the merged company. What is clear is that another big Canadian-based mining company is falling into foreign hands.
Mark Bristow’s tenure as boss of the world’s biggest gold miner might have been short-lived, but his message for smaller rivals just got even more pointed.
“Holy camoly, I missed out on a great opportunity!” is how Bristow described anyone not involved in Barrick Gold Corp.’s purchase of Randgold Resources Ltd. in September. With Newmont Mining Corp. poised to become the No. 1 producer through a $10 billion takeover of Goldcorp Inc. announced Monday, the pressure on those left behind will be even greater.
The two mega deals promise to transform the industry that many investors have shunned due to floundering bullion prices and poor decision making by producers. The newly combined companies are also expected to put several unloved assets up for sale, leaving lots of room for maneuvering by those that missed out on the dealmaking so far.
Toronto’s Barrick Gold always wanted to team up with Newmont Mining of Colorado. Merging the two giants, which have adjoining operations in gold-rich Nevada, would have created an unassailable industry leader and reduced costs by an estimated US$1-billion a year. On paper, it looked like a dream deal. But it never got off the ground, in good part because Barrick founder Peter Munk wanted the new company to stay in Toronto, not move to Denver.
Were he alive today, Mr. Munk – a Canadian patriot who believed in the value of head offices – would be distraught. In the autumn, Barrick bought Randgold Resources but handed management control to Randgold’s executives, who promptly gutted Barrick’s Toronto headquarters, leaving the world’s top producer with a mere 65 employees in its echo-chamber offices on Bay Street. The deal was, in effect, a reverse takeover. The new Barrick will be run from the Channel Islands.
On Monday, it was Newmont’s turn to accelerate what appears to be the second wave of the great hollowing-out story, a decade after Inco, Falconbridge, Alcan, Dofasco, Stelco and dozens of other industrial powerhouses were eradicated from the Canadian map.
Barrick Gold Corp.’s new boss intends to push ahead with plans to increase investment in the mineral-rich — but environmentally tricky — deposits straddling the Chile-Argentina border.
“If you want to find elephants, go to elephant country,” Chief Executive Officer Mark Bristow, a South African geologist and big-game hunter, said in a phone interview. The Toronto-based company “absolutely” intends to invest more money in the El Indio copper-and gold belt, he said, adding that its partnerships with Chinese and Chilean miners remain key to its strategy in the region.
The world’s largest gold miner, which completed its merger with Randgold Resources Ltd. at the beginning of the year, had been revamping its South American strategy since John Thornton became chairman in 2014.
Matthew J. Bellamy is an associate professor of history at Carleton University in Ottawa and the author of Profiting the Crown: Canada’s Polymer Corporation.
When General Motors announced in late November that it would be closing its plant in Oshawa, Ont., the outrage was immediate – and perfectly understandable. Here was a strategic move on the part of a multinational company, tearing out roots and slashing the manufacturing jobs that were the lifeblood of the town. Add in the billions of dollars that Ottawa had spent to keep the company in Canada, and it’s easy to see why Canadians would take this so personally.
Meanwhile, the recent news about Barrick Gold – that it would lay off more than half of the staff at its Toronto head office in the wake of a merger with Randgold, an African operator headquartered in the Channel Islands, and revamp its board of directors to leave just one Canadian-born member who lives in New York – hasn’t stirred the emotions in quite the same way.
Fair enough, too: Much of Barrick’s business, since it transitioned from a money-losing oil and gas firm to a money-spinning mining company, has happened outside of Canada, in places such as the United States, Australia, the Dominican Republic, Peru, Argentina and Chile. And even though the company’s dynamic founder, Peter Munk, lived in Canada for seven decades, he passed away in March.
The Canadian Mining Hall of Fame was conceived by the late Maurice R. Brown, former editor and publisher of The Northern Miner, as a way to recognize and honour the legendary mine finders and builders of a great Canadian industry. The Hall was established in 1988. For more information about the extraordinary individuals who have been inducted into the Hall of Fame, please go to their home website: http://mininghalloffame.ca/
The greatest discoveries are transformative, and Brian Meikle is one of only a few modern-era geologists who achieved this pinnacle of success. In the 1960s, he contributed to the discovery and development of the Camflo gold mine in Quebec, and later was part of a talented team that made it a cornerstone of growth for Barrick Gold (formerly American Barrick). In the early 1980s, he recognized the potential of the Mercur gold mine in Utah, which became a key link in the evolution of Barrick.
Meikle’s crowning achievement was the 1986 Goldstrike discovery in Nevada, which grew to approximately 60 million ounces of gold reserves and resources in several deposits. Goldstrike propelled Barrick into the world’s largest gold miner and generated immense wealth that has flowed back to benefit Canadian companies, shareholders and society.
Born in Montreal, Meikle returned to Canada from California as a post-graduate student. He earned an MSc degree (geology) from McGill University in 1955, followed by his PhD in 1959. He was the recipient of McGill’s Logan Gold Medal in 1958, awarded to the graduating student who stands highest in the First Class Honours list in Geology.
http://www.pendaproductions.com/ This video was produced by PENDA Productions, a full service production company specializing in Corporate Communications with a focus on Corporate Responsibility.
In 1962, Meikle joined Camflo Mines and was instrumental in discoveries that made the mine and the company. He spent 22 years with Camfl o in diverse roles, including mine manager and vicepresident of operations. In 1984, Peter Munk acquired Camflo for American Barrick and also gained a dream technical team to help realize his dream of creating a major gold producer.
(LtoR) Lisa MacDonald, Executive Director, Prospectors and Developers Association of Canada, presenting the award to Janet Meikle on behalf of Brian Meikle at the Mining Hall of Fame dinner on January 10th. Keith Houghton Photography.
Barrick Gold Corp.’s new chief executive is surprised by the “hysteria” over whether the world’s largest gold miner will remain a Canadian company.
Barely a week after his Channel Islands-based Randgold Resources Ltd. merged with Barrick, Mark Bristow says he’s determined to keep the global miner headquartered in Toronto — or at least as committed as he is to any head office.
“Mining industries have to catch up with the reality of the times,” Bristow said in a phone interview from Jackson Hole, Wyoming, where he maintains a home. “We can’t sit in this massive corporate office — this old tradition — trying to run an organization that’s global by remote control.”
Now that Barrick Gold Corp. has completed its merger with Randgold Resources Ltd., investors will need to see evidence that the combined company can navigate a thorny issue: Does Barrick’s shift toward African-based mines raise the geopolitical risks for a company that used to be defined by its stable locales?
The deal between Barrick and Randgold, announced last September and finalized on Jan. 1, comes amid a much-needed jolt for the gold sector.
Gold producers had fallen out of favour in recent years, as the price of gold declined 32 per cent since 2011 amid paltry new discoveries and rising production costs. And with interest rates on the rise in the United States over the past two years, gold’s attractiveness as a haven next to yield-bearing fixed income investments, including ultrasafe U.S. Treasury bonds, had been sidelined.
Barrick Gold Corp.’s new chief executive says the company is sizing up a number of acquisition opportunities in Canada as it looks to boost investment in its home country.
“If you look at the corporate structure, the biggest gap is the fact that it’s under invested in Canada,” Barrick chief executive officer Mark Bristow said in an interview late last week.
Barrick last week completed its US$6-billion acquisition of rival gold miner Randgold Resources, and Mr. Bristow, Randgold’s founder, formally took over as Barrick’s CEO after being named in September to take the post. Amid Mr. Bristow’s pending leadership, Barrick made steep cuts to staff at its Toronto head office and a revamp of the board has left just one Canadian director.
