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Barrick Gold Corporation

Ex-Goldman Banker Emerges as Barrick Gold Dealmaker – by Liezel Hill and Christopher Donville (Bloomberg News – April 22, 2014)

http://www.bloomberg.com/

A week before Barrick Gold Corp. (ABX) Chairman Peter Munk retires, his successor John Thornton is emerging as a dealmaker as the former Goldman Sachs Group Inc. banker pursues a bid to combine the two biggest gold miners.

Negotiations between Barrick and Newmont Mining Corp. broke off last week amid minor disagreements while leaving open the possibility that discussions could still resume, two people with knowledge of the matter said April 19.

The deal under discussion would have seen Thornton become executive chairman of the combined company while the chief executive officer would have been Gary Goldberg, who currently leads Newmont, the people said. Toronto-based Barrick’s CEO Jamie Sokalsky would have led a smaller gold producer spun off from the merged company, according to the people.

The proposed tie-up and its management reshuffle confirm Thronton’s elevation as Barrick’s most senior executive. The 60-year-old, who had no role in the mining industry until he joined the company’s board just over two years ago, is set to succeed Munk, Barrick’s 86-year-old founder, as chairman at the annual shareholders meeting next week. Leading a successful acquisition of Newmont (NEM), in what would be the biggest gold takeover, would set up Barrick to do further deals, including ones involving other commodities.

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[Barrick’s] Munk touts ‘significant synergies’ in potential Newmont deal – by Rachelle Younglai (Globe and Mail – April 23, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Barrick Gold Corp.’s founder and chairman Peter Munk said merging with rival Newmont Mining Corp. could result in “significant” cost savings, especially in Nevada where the two North American gold miners operate.

The world’s two largest gold producers had hoped to announce an all-stock merger deal before Newmont’s annual shareholder meeting in Delaware on Wednesday, but disagreed over which assets to spin off, sources have said. Although talks were halted late last week, the companies are still open to merging in an effort to cut costs amid the deep slump in gold prices, sources have said.

“Combining Barrick and Newmont could result in significant synergies and cost savings, particularly in Nevada, where our operations are literally next door to one another,” Mr. Munk said in an e-mailed statement.

Gold has lost more than a third of its value since peaking above $1,900 (U.S.) an ounce three years ago. The weaker precious metal price, now trading below $1,300 an ounce, has forced the gold industry to overhaul operations to preserve cash.

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Barrick Gold-Newmont Mining ripe for merger as conditions favour tie-up of world’s gold giants – by Peter Koven (National Post – April 22, 2014)

The National Post is Canada’s second largest national paper.

Barrick Gold Corp. and Newmont Mining Corp. have held merger talks numerous times in the past without getting a deal done. But conditions finally appear right to bring together the world’s two largest gold producers.

A rough gold market, along with new personalities on both sides of the negotiating table, have helped the two companies overcome their longstanding differences and put them on the cusp of a deal that analysts and investors have eagerly awaited for years.

Recent merger talks between the two sides broke down over a disagreement on what assets to put into a spin-off company, according to sources. However, the broad terms of the merger were largely agreed upon, with Toronto-based Barrick planning to buy Denver-based Newmont for close to US$13-billion in stock, representing a small 13% premium over its recent trading range.

The two gold miners hoped to announce the deal ahead of Newmont’s annual meeting on Wednesday, but that now appears unlikely. Newmont shares rose 6.4% on Monday. Barrick shares opened higher, but then declined as gold dropped and investors absorbed the merger news. They ended the day down 4%.

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Barrick must check its hubris to achieve a smooth Newmont merger – by Boyd Erman (Globe and Mail – March 22, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Barrick Gold Corp. says its strategy is no longer about bigger, but about better. A successful merger with Newmont Mining Corp. has got to be about a bit of both.

Barrick is not talking yet, as no deal is done, but job one when a transaction is finalized will be to explain just how a combination with Newmont would square with Barrick’s new strategy.

Toronto-based Barrick has long sought to gain control of Newmont. Talks have gone on and off for more than decade as Barrick grew to become the world’s largest gold producer.

Newmont plus Barrick would create by a huge margin the world’s largest gold miner. There was a time when that would have been sufficient rationale for Barrick, but that is no longer good enough. Shareholders want returns and cash flow from their mines. They want profit from mining companies, not just growth.

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Excerpt from Boardroom Games: You’re Fired! – Mining Boards: Local and Foreign Adventures – by Peter Crossgrove

To order a copy of From Boardroom Games: You’re Fired, click here: http://amzn.to/1pA7i7q or here: http://bit.ly/OYexer

For a three part BNN interview with Peter Crossgrove, click here:

http://watch.bnn.ca/#clip1071973

http://watch.bnn.ca/#clip1071974

http://watch.bnn.ca/#clip1071978

Excerpt from “Boardroom Games: You’re Fired!” – Mining Boards: Local and Foreign Adventures

Sudbury-born Peter A. Crossgrove and another partner invested in Interior Door, a private company that became Masonite, a public company sold to KKR for $3.2 billion in 2004. Peter’s mining and boardroom experiences are indelibly etched real-life scenarios—humorous and thought provoking. Having served on close to seventy mining, corporate, and not-for-profit boards, armed with a sense of humour, dignity, dogged determination, and humility, Peter has challenged boardroom antics and relationship intricacies with the skill-sets and values he was raised with.

Early Barrick Days

In the early Barrick days, Barrick Gold was originally called American Barrick so it would be listed higher in the newspaper stock pages and easier to find by investors. The original company was United Sysco and the CEO was Bob Fasken. Bob’s COO was Bob Smith. I knew them both well. I used to fly up with them in the company’s Turbo Beaver to Griffith Island, an island off Wiarton in Georgian Bay, to shoot pheasant and chucker partridge. We were members of the Griffith Island Club in Georgian Bay.

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Editorial: Barrick rejigs exec pay – by John Cumming (Northern Miner – April 2, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.  jcumming@northernminer.com

Businessman and Bay Street veteran Peter Crossgrove, the one-time Placer Dome CEO and long-time Barrick Gold director, published his memoirs last year, and it makes for some lively and insightful reading, especially in light of Barrick’s newly revamped executive compensation program.

In his book titled “Boardroom games: You’re fired! When core values, respect and meaningful business practices are compromised for money and prestige,” Crossgrove is blunt in his criticism of the Barrick board, from which he was booted a couple of years ago to make way for Goldman Sachs’ John Thornton, who will become full Barrick chairman at the April 30 annual meeting, as founder Peter Munk retires.

“What do I think Barrick has to do to recover?” writes Crossgrove in 2013. “First of all, I would say they should find at least three directors who know the operating side of the business and form a technical committee . . . I suggest the chair, vice-chair and board members’ salaries be cut by 70%. They should only allow the chief operating officer the use of the corporate jet and get rid of the advisory board, which is a large expense and should be deleted . . . in 22 years I can only recall one meeting with the advisory board, whom I believe meet one day a year and are paid $100,000 per year.”

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Barrick Gold slashed chairman’s pay to US$9.5M last year after investor outrage – by John Shmuel (National Post – April 1, 2014)

The National Post is Canada’s second largest national paper.

TORONTO — Barrick Gold Corp. unveiled a new compensation package for executives Monday, a year after management faced heavy blowback for a generous signing bonus that made incoming chairman John Thornton one of the highest paid executives in Canada.

The world’s largest gold miner said it had scaled back Mr. Thornton’s pay for 2013 to US$9.5-million, compared with US$17-million the prior year. Mr. Thornton’s original pay package, which included a US$11.9-million signing bonus, caused a rare rejection last year by shareholders of the company’s executive compensation plan.

“We heard shareholders loud and clear,” said Brett Harvey, Barrick’s lead director, adding that he saw the new compensation model as one that others in the industry are “going to follow.”

The new “scorecard” system will see Barrick pay a large chunk of compensation in stock that executives will have to hold until they retire or leave the company. It will also base salary on a number of performance metrics, including delivering planned cash flow, achieving cost targets and meeting earnings expectations. As chairman, Mr. Thornton will not fall under the new scheme.

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Barrick to revise executive compensation rules – by Rachelle Younglai (Globe and Mail – March 31, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Barrick Gold Corp. will unveil pay packages for outgoing chairman Peter Munk and his successor John Thornton, as well as new executive compensation methods, after shareholder uproar over the incoming chair’s signing bonus.

Mr. Thornton’s $11.9-million (U.S.) bonus galvanized the traditionally passive Canadian pension funds to demand changes to how Barrick was governed, triggering the company to overhaul its board of directors late last year.

Barrick’s management proxy circular, to be filed on Monday, will present a new compensation scheme designed to align management’s pay even more closely with the miner’s performance. The company’s plan is expected to require executives to hold their shares until they leave the company.

That would be a departure from the previous arrangements, which allowed management to exercise their stock options at certain dates. “This is coming after they paid Thornton his big bonus. In some respects it’s like shutting the barn door after the horses have left,” said Robert Gill, vice-president and portfolio manager at Lincluden Investment Management, which holds $3.3-billion in assets including Barrick.

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Peter Munk: A mining magnate nears the end of his golden reign – by Eric Reguly (Globe and Mail – March 15, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

KLOSTERS, SWITZERLAND – On a chilly evening in early March, Peter Munk picks me up from my hotel in his tiny Fiat Punto, manual transmission, that he drives himself. His wife Melanie is stuffed in the back and our destination is the local schnitzel restaurant, where the Munks are treated like anyone else in Klosters, the Swiss ski village near Davos.

What a change. The last time I spent more than a few minutes with Mr. Munk was in 2008, in Montenegro’s glorious Bay of Kotor, the Mediterranean’s only fjord. We were on his chartered superyacht, the 50-metre Te Manu, a nautical pleasure palace with a crew of 11 that would have made any oligarch proud.

Has Mr. Munk, the founder, co-chairman and former chief executive officer of Barrick Gold Corp., fallen on hard times since then? Yes and no.

At $27-billion, Barrick is worth less than half of its peak in 2011, just before the gold price collapsed and the financial horror of the company’s now-suspended Pascua-Lama mining project in the Andes was exposed. Mr. Munk’s wealth has declined along with the share price (although he owns only 2.1 million common shares), but certainly not to the point where he is flying economy and forgoing oysters and champagne.

Instead, the Fiat represents the new, simpler life of the Hungarian emigrant to Canada who turned a motley collection of gold assets into the world’s mightiest gold producer. Mr. Munk will leave the Barrick board at the company’s annual shareholders’ meeting in Toronto on April 30, after which John Thornton will go from co-chairman to chairman.

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Barrick transformed under steady hand – by Lisa Wright (Toronto Star – March 14, 2014)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

CEO Jamie Sokalsky has overseen ‘most radical change’ in gold miner’s history

Jamie Sokalsky is the first to admit he’s not the flashiest guy in the rough and tumble gold mining game. “I’m an accountant, my wife is an accountant, my oldest daughter is an accountant and my youngest daughter is studying to be an accountant,” says the chief executive of Barrick Gold Corp. with a chuckle.

While the mild-mannered 56-year-old likes to downplay his management style as rather dull, Sokalsky has ironically overseen the wildest times in the history of the world’s largest gold miner after taking the helm nearly two years ago.

“Barrick is quite a changed company in the last couple years. We’ve radically changed how we’re running it,” he says in his first sit-down interview since his surprise promotion to CEO in June, 2012.

Indeed, the bullion behemoth – whose mantra for years had been ‘bigger is better’ and growth at all costs – is almost a shadow of itself, having gone from 27 mines across the world to 19 in the last six months alone as it shed almost $1 billion of money-losing assets amid the plummeting gold price.

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UPDATE 2-Barrick to sell part of its stake in African Barrick – by Euan Rocha (Reuters U.S. – March 10, 2014)

http://www.reuters.com/

(Reuters) – Barrick Gold Corp said on Monday it plans to sell about 13.5 percent of its holdings in its majority-owned subsidiary African Barrick Gold .

Toronto-based Barrick, which currently owns a roughly 303.25 million shares in African Barrick, is selling 41 million shares. The gold miner will still own a majority stake of just over 60 percent in the Africa-focused miner following the close of the transaction.

Barclays analyst Farooq Hamed believes the stake sale will result in proceeds of just over $200 million that will help bolster the gold miner’s balance sheet and allow it to trim its debt load.

The move is the latest attempt by the world’s largest gold miner to trim its asset base and reduce its exposure to higher cost assets. In 2012, the company attempted to sell a part, or all of its interest in African Barrick Gold to China National Gold Group, but those talks fell apart last year.

The company has since gone on to sell a number of non-core assets. In January, Barrick Gold agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources for A$75 million.

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COMMENT: Chilean court cancels Pascua-Lama fine, retains suspension – by Marilyn Scales (Canadian Mining Journal – March 10, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

As we are used to hearing – there is good news and bad news. This time Toronto’s Barrick Gold is on the receiving end of both, thanks to the environmental court in Chile. At issue is the future of the expensive Pascua-Lama gold project that straddles the Chile/Argentina border.

Last week, Chile’s second environmental court annulled the fines imposed by a local environmental regulator (SMA). The amount is small – $16 million compared to the projected $8.5-billion cost of the project. The higher court cited “errors and illegalities” in the SMA’s resolution, and removed the fines. The SMA will now consider each of 23 charges separately, and readers can expect that the fines will be re-imposed.

That was the good news. Now the bad. At the same time the court upheld the suspension of work order imposed on the Chilean portion of Pascua-Lama. The only project Barrick has been allowed to work on is the water management system.

The Pascua-Lama project has been one of the most difficult any mining company tried to develop.

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Gold Miners See Looming Output Drop After Cut in Mine Spending – by Liezel Hill (Bloomberg News – March 03, 2014)

http://www.businessweek.com/

The biggest gold producers say global output will fall short of expectations and is poised to decline after the worst price slump in three decades spurred them to cut spending and revise mining plans.

Barrick Gold Corp., Goldcorp Inc. and Newmont Mining Corp., the three biggest producers by market value, say the industry has changed after gold plunged 28 percent last year. The decline forced miners to take at least $30 billion of writedowns.

“The industry has gotten more disciplined,” Barrick Chief Executive Officer Jamie Sokalsky said in a Feb. 24 interview. “We are in an inflection point now where I think ultimately gold production in the industry could start to decline more than people think.”

Sokalsky said lower mine output may support gold prices. Demand for physical metal is growing in China, according to Sean Boyd, the CEO of Canada’s Agnico Eagle Mines Ltd. Central banks, net purchasers for four straight years, will keep buying, he said in an interview. The outlook for gold will be on the minds of many at the annual Prospectors & Developers Associated of Canada convention which began yesterday in Toronto.

Gold fell 0.4 percent to $1,326.39 an ounce on Feb. 28 in London. After posting its biggest annual loss in 32 years, the metal is up 10 percent in 2014.

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Barrick’s $10.4-billion loss caps brutal year for miners – by Rachelle Younglai (Globe and Mail – February 14, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The gold industry’s growth binge is over, and mining companies have sobered up. After a dismal year in which bullion and mining stocks dropped sharply in value, gold companies are slowly regaining their footing and learning to live with the lower precious metal price.

Canadian gold companies, from heavyweights Barrick Gold Corp., Goldcorp Inc. and Kinross Gold Corp. to the smaller Agnico Eagle Mines Ltd., slashed their bullion reserves and collectively recorded $17-billion (U.S.) in impairment charges in 2013.

Barrick chief executive Jamie Sokalsky, who closed the book Thursday on a $10.4-billion net loss for the year, called it the most difficult year in the company’s 30-year old history and said it has gone through a “sea change.” The world’s biggest gold producer epitomized the industry’s mantra of “growth, growth, growth, growth” during the commodity boom. But in the past few months it has overhauled its board, sold expensive mines, put the brakes on a key project and paid down some of its debt while trying to calm shareholders irate with how the company was governed.

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Barrick Gold Production Seen Hitting Nine-Year Low – by Liezel Hill (Bloomberg News – February 11, 2014)

http://www.bloomberg.com/

Barrick Gold Corp. (ABX) is poised to cut output to a nine-year low, a sign the world’s largest gold miner is making headway on its plan to put profits before growth.

Barrick may produce 6.3 million ounces of gold this year, based on the average of four analysts’ estimates compiled by Bloomberg. That would be as much as 15 percent less than last year and the lowest since the company became the gold industry leader in 2006.

The Toronto-based miner, which is expected to issue 2014 forecasts when it reports fourth-quarter earnings Feb. 13, isn’t alone in its strategy. Gold producers have cut budgets, sold mines and curtailed operations after the metal plunged last year by the most in more than three decades.

“Barrick represents a turnaround situation,” Robert Gill, who helps manage C$3.3 billion ($3 billion) including Barrick shares at Lincluden Investment Management, said yesterday by phone. “It’s a different company now than what it was for much of its existence.”

The miner led an industrywide pursuit of expansion over the past decade as gold producers sought to capitalize on prices that rose for 12 straight years.

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