In Chile’s dry north, big mining threatens a vital resource – by Rosalind Adams and Sarah Tory (Santiago Times – August 24, 2013) [Part 1 of 3]

http://www.santiagotimes.cl/ [Chile]

Part I of a three-part series on Chile’s water crisis: Amid a growing water shortage, the Huasco Valley struggles to find a balance between mining and agriculture.

Deep in Chile’s Atacama Region, Sandra Anacona makes jam from the apricots and peaches that grow on her two-acre farm, land that has been in her husband’s family for six generations. Her face wrinkled into a permanent smile, she shuffles around the kitchen preparing meals and piping-hot cups of Nescafé for the endless parade of neighbors and family who show up at her dining table.

In the Valle del Huasco, these family-run farms, clustered around small pueblos like Alto del Carmen and San Félix, are permanent fixtures: ask for directions, and people give names instead of addresses — testament to a lifestyle that has changed little in 200 years.

Formed by the river snaking between Andean peaks, the Valle del Huasco appears like a ribbon of green in one of the driest places on Earth. Defying the surrounding desert, acres of pisco grapes grow, along with mangos, oranges, papayas and avocados.

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Barrick Gold founder Peter Munk’s final play – by by Jonathon Gatehouse (MacLean’s Magazine – October 1, 2013)

http://www2.macleans.ca/

He’s fending off a shareholder revolt and fighting for a legacy

Back in 1996, Peter Munk sat down with one of his biographers and laid out his 34 “golden rules” for success in business. Some of them offer practical advice: “Always leave something on the table in a public issue. If you push for the last penny, it may hurt you the next time around.” While others border on fortune-cookie wisdom: “Time is short.

If you want to achieve much, you’ve got to run.” Taken all together, the list seems less like a coherent corporate philosophy than an odd mélange of exhortations to take risks and calls for fiscal prudence. But there was also an element of prophecy—at least when it comes to the current fortunes of the celebrated 85-year-old entrepreneur. “If you want to dream big, expect big problems,” states rule 30. “Big dreams challenge the fates.”

From its humble beginnings as an oil and gas play in 1983, Munk’s Toronto-headquartered Barrick Gold Corporation has grown into the world’s largest gold producer, with 24 mines operating on four continents, five more in development and ore reserves estimated at more than 140 million ounces. Characterized by the relentless pace and sheer scale of its acquisitions, including a 2011 foray into copper with the $7.66-billion takeover of Equinox Minerals Ltd., the company had been a darling of investors for more than two decades. At its peak in 2011, Barrick was trading at $53 a share and had a market capitalization of $54 billion.

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Mining in the Dominican Republic: Sickness and wealth (The Economist – September 21, 2013)

http://www.economist.com/

THE $4 billion that two Canadian companies, Barrick Gold and Goldcorp, have poured into developing Pueblo Viejo, a gold mine, since 2009 amounts to the largest single foreign investment in the history of the Dominican Republic. The companies say that the money has turned the polluted ruins of what was the state-owned Rosario mine, abandoned in 1999, into a “truly world-class” operation that should provide the country’s government with $10 billion over its 25-year life.

But the project has been controversial. Just weeks after the mining started in January, President Danilo Medina, who was elected last year, declared: “For every $100 of gold exports, Barrick will receive $97 and the Dominican people $3. That is simply unacceptable.” (In fact, Pueblo Viejo Dominicana Corporation, or PVDC, the company operating the mine, is 60% owned by Barrick and 40% by Goldcorp.) Mr Medina demanded that the contract be renegotiated; otherwise, he said, he would raise taxes on the mine’s profits.

This month the two sides agreed to changes that have front-loaded tax payments and could see the government get an extra $1.3 billion in 2013-16 provided that the gold price rises and stays above $1,600 an ounce (it is now around $1,350). Gustavo Montalvo, Mr Medina’s chief of staff, tweeted: “Together we ensured that words like ‘national sovereignty’, ‘justice’ or ‘transparency’ were transformed into something more concrete.”

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Peter Munk responds to his critics – by Peter Munk (Globe and Mail – September 25, 2013)

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.

In an article published in this newspaper on Sept. 18, 2013, David Parkinson was unfairly critical of me and the governance practices at Barrick Gold Corp. Mr. Parkinson went so far as to suggest that I was treating Barrick as if it were my “personal piggy bank.” You have extended to me the opportunity to rebut his criticisms, for which I am thankful.

I founded Barrick more than 30 years ago. In the period since, Barrick has become one of the most successful companies in Canada, and one of the world’s largest and most profitable gold mining companies. Barrick now has operations on five continents and more than 25,000 employees. In the most recent fiscal year, Barrick had record revenues of more than $14.5-billion. In the last three years alone, despite some major non-cash write-offs, Barrick had operating cash flows of more than $16-billion; and EBITDA (earnings before interest, taxes, depreciation and amortization) of more than $23-billion. Measured by these key metrics, this ranks Barrick as one of the top performing companies on the Toronto Stock Exchange over the period.

Contrary to Mr. Parkinson’s assertions, the board of directors of Barrick takes its governance obligations very seriously. Moreover, the compensation arrangements referred to in his article were approved both by Barrick’s compensation committee, comprised entirely of independent directors; and subsequently and unanimously by the independent directors of the board as a whole.

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Barrick Gold’s brave (and scary) new world – by David Milstead (Globe and Mail – September 21, 2013)

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 buzzword at Barrick Gold Corp. is governance, as the miner responds to unhappy shareholders by adding new members to its board and revising its pay practices for key executives.

The changes that may make the biggest difference to its survival, however, are occurring at the Toronto-based company’s mines. During the past few months, Barrick has cut its head count and deferred capital spending. It has also slashed its dividend as the price of gold has slumped.

As the most debt-heavy miner in the industry, Barrick has the most to lose as gold prices decline. It also has the most to gain as gold prices rise, which may explain why the shares are now near $20, up about 40 per cent from their weakest points earlier this year, as gold has bounced off its recent lows.

Investors who choose Barrick as a means of playing a gold rebound, however, could be in for a long, painful slog if the metal’s price languishes.

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Pressure on Barrick Board Centers on Long-Time Directors – by Liezel Hill & Katia Dmitrieva (Bloomberg News – September 18, 2013)

http://www.bloomberg.com/

Investor pressure to change the board at Barrick Gold Corp. (ABX), the world’s biggest producer of the metal, is centering on long-serving directors, including former Canadian Prime Minister Brian Mulroney.

Canada’s biggest pension funds want new independent board members and say the miner should consider replacing directors who have been there longer than 20 years and are close to Co-chairman and founder Peter Munk, according to two investors briefed on the matter who asked not to be identified because the information hasn’t been made public.

Barrick said yesterday it will add new independent directors and strengthen its executive pay policies after investors criticized governance at the company. The gold miner took $8.7 billion of writedowns in the second quarter and cut its dividend 75 percent after gold prices fell the most in three decades.

“The tenure on the board is far too long and there are far too many non-independent directors,” said Robert Gill, a Toronto-based fund manager at Aston Hill Financial Inc. (AHF), which manages C$7.8 billion ($7.6 billion), including Barrick shares. “It’s time to change the board and we need to bring in more independence into the board,” he said by phone Sept. 11.

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Investors turn up the heat on Barrick for boardroom change – by Jacqueline Nelson (Globe and Mail – September 17, 2013)

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.

Some investors are seeking reform in Barrick Gold Corp.’s boardroom and want the company to hasten the transfer of power from co-chairman Peter Munk, according to a published report.

In the most recent sign of tensions at the world’s largest gold miner, about 10 shareholders based in Europe will soon send the board of directors a letter to push for faster changes, the Wall Street Journal said, citing sources close to the company.

“Some directors have sought change at a faster pace than others have been comfortable with,” the report said. The Journal said director Robert Franklin planned to give up his board seat if some new directors weren’t appointed.

Earlier this year, a group of seven major pension funds took issue with the beleaguered gold producer’s board after a large sum was paid to Mr. Munk’s co-chairman, John Thornton.

More than 85 per cent of the company’s stakeholders did not approve of the $17-million payout to Mr. Thornton, voting against it and other multimillion-dollar payments to board members, including Mr. Munk.

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Hedge fund urges breakup of Barrick Gold to boost stock price – CBC News Business (September 9, 2013)

http://www.cbc.ca/news/business/

A small, U.S. hedge fund wants to break up Canadian mining giant Barrick Gold, saying its collection of mining assets is spread out over too broad of a geographic area, which has led to a disappointing shareholder return.

Mike Morris, co-founder of Two Fish Management, which is exposed to Barrick Gold through its options holdings, has written to Barrick CEO Jamie Sokalsky and other board members recommending that the North and South American assets of the mining company be split from the African and Australian Pacific holdings.

“Each distinct business unit has unique political environments, geologies, operating costs, reserve profiles, profitability, capital intensities and growth prospects,” he says in the letter.

Barrick Gold’s stock has fallen by nearly 50 per cent in the past year, as the gold mining company took massive writedowns and cut its dividend. The price of gold has been falling, but in addition, Barrick’s gold production per share fell 28 per cent from 2003 to 2012, Morris said.

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U.S. hedge fund demands breakup of Barrick, additions to its board – by Canadian Press (Vancouver Sun – September 5, 2013)

http://www.vancouversun.com/index.html

A U.S. hedge fund is making a renewed call for changes at Barrick Gold, calling for the breakup of the company and the addition of a mining engineer and geologist to its board.

Mike Morris, principal and founder of Two Fish Management, said Wednesday that there is no compelling reason for Barrick to own a worldwide conglomerate of gold mines. “The market is essentially assigning a massive conglomerate discount to the company,” he said Wednesday.

Since Two Fish first wrote to Barrick demanding changes in April, the gold miner has agreed to sell off its Barrick Energy subsidiary in a series of deals worth a total of $455 million and three high-cost mines in Western Australia to South Africa-based miner Gold Fields Ltd. for $300 million.

But Morris and Two Fish wants more and to that end, the fund has produced a new 78-page presentation detailing the changes it thinks are needed. “This is Canada’s company and this is the world’s largest gold-mining concern and it doesn’t have a geologist or an engineer on its board,” he said.

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Fears grow about Reko Diq Gold mines…Baloch senator says deal offered to China; government denies – by Shaheen Sehbai ([Pakistan] The News International – August 28, 2013)

http://www.thenews.com.pk/

WASHINGTON: While major world mining and investment companies are preparing to invest big time, big money in Balochistan, specially in the mining sector, suspicions and doubts that the biggest gold mine of Reko Diq may be quietly handed over to China as part of the growing economic ties are also coming to the fore.

Official and business circles have been wondering for some time what will happen to the multi-hundred billion dollar Reko Diq gold and copper mines after the world’s largest mining company, Barrick Gold of Canada, was thrown out of Pakistan by the Supreme Court of Pakistan during the PPP regime.

But after the recent visit of high level government delegation to China and a flurry of quick MoUs and super-paced exchange of visits, an important leader from Balochistan, former Senator Sana Baloch has alleged publicly that the government has promised these mines to China in a year or so.

While the Government leaders strongly denied any deal or any promise made during the Beijing visit, an official Pakistan Government statement assuring that the Reko Diq mines will be given to the highest bidder in an international tender is still awaited.

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Barrick Gold Corp. to sell three mines in Australia for $300 million (Canadian Press/Toronto Star – August 23, 2013)

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.

Barrick Gold Corp. has agreed to sell off three high-cost mines in Western Australia to South Africa-based miner Gold Fields Ltd. — a move analysts say will free Barrick up to focus on more profitable operations.

Barrick said it will receive about $300 million from the sale, which is subject to customary closing conditions, including approval by Australia’s Foreign Investment Review Board.

The company said the three mines that comprise the Yilgarn South assets produced a total of 452,000 ounces of gold in 2012 and a further 196,000 ounces in the first half of this year.

Kerry Smith, an analyst at Haywood Securities, said selling the higher-cost mines will reduce Barrick’s operating expenses and have only a minimal impact on the company’s production volumes. “By eliminating those three mines out of their portfolio, it frees their management up to spend more time on other assets that actually make more cash,” Smith said.

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Barrick Gold sells mines to Gold Fields as part of restructuring – by James Wilson and Andrew England (Financial Times – August 22, 2013)

http://www.ft.com/home/us

London/Johannesburg – Barrick Gold has started its promised restructuring by selling a trio of Australian gold mines to industry rival Gold Fields.

The $300m sale will help the Canadian miner’s stretched balance sheet and will switch Gold Fields’ main production focus away from western Africa to Australia, where it will bundle assets with its existing mines to try to lower costs.

Barrick, the world’s largest gold miner by volume, flagged the possible sale of the Yilgarn South mines earlier this month, when it posted an $8.6bn quarterly loss. The loss was linked to writedowns to asset values because of the fall in the price of gold this year.

The three mines at Yilgarn South produce 452,000 ounces of gold annually, equivalent to about a quarter of Gold Fields’ annual output. Barrick said the sale would not change its plan to produce between 7m and 7.4m ounces this year.

Nick Holland, Gold Fields’ chief executive, said there was “considerable opportunity for cost synergies” between the Lawlers mine, one of the Yilgarn South group, and its adjacent Agnew mine.

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RPT-INSIGHT-Barrick Gold’s Peter Munk seeks to regain his Midas touch – by Euan Rocha (Reuters U.S. – August 22, 2013)

http://www.reuters.com/

Aug 21 (Reuters) – Peter Munk has long driven the agenda for Barrick Gold Corp, the company he formed in 1983 and built into the world’s largest gold producer, but recent missteps have raised questions about the leadership of a man once seen as a visionary in the industry.

Munk, who owns a stake of less than a quarter of a percent in the company, still steers Barrick’s strategy from his position as chairman, and he is now attempting to shore up the miner’s position. But some investors, seizing on what they view as misguided decisions and problems at several mines, are questioning both the company’s direction, and Munk’s role.

In the last two years, gold miners across the globe have been stung by falling bullion prices and a surge in costs. Barrick has fared worse than its rivals, outlining about $13 billion in writedowns this year alone.

Its share price is down nearly 65 percent in two years, outpacing a 50 percent drop in the NYSE Arca Gold Bugs Index , and a 26 percent drop in the price of spot gold.

While environmental woes at its Pascua-Lama gold-mining project, high in the Andes, have been the biggest drag on Barrick’s share price, investors have taken the most issue with its disappointing push into copper and with a proposal to give Munk’s heir apparent, co-chairman John Thornton, an unusually large, $11.9 million signing bonus.

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Another gold CEO bites the dust – this time at African Barrick – by Lawrence Williams (Mineweb.com – August 21, 2013)

http://www.mineweb.com/

African Barrick Gold’s CEO Greg Hawkins has resigned and has been replaced by Bradley Gordon, formerly with Intrepid Mines, to try and improve the fortunes of the African gold miner.

LONDON (MINEWEB) – African Barrick Gold (ABG), which has seldom seemed able to meet its operating objectives since its spin-off from parent Barrick Gold and listing on the London Stock Exchange three years ago, has announced the resignation of its Chief Executive Officer, Greg Hawkins ‘to pursue other opportunities’, and his replacement by Australian Bradley Gordon who takes over with immediate effect. Gordon resigned from his previous position as CEO of Intrepid Mines last month – presumably with the ABG appointment already settled.

Thus, Hawkins is the latest gold mining company CEO to be ousted, in this case to see if new blood can revitalise the ailing African gold miner. African Barrick stock has lost 73% of its value since its launch in 2010 and, although part of this fall is attributable to the plunging gold price and so outside management control, Hawkins is seemingly carrying the can for the company’s continual underperformance.

ABG operates three mines in Tanzania and is that country’s largest gold miner. The flagship mine is the Bulyanhulu underground operation and the others are Buzwagi (open pit) and North Mara, also an open pit operation. A fourth mine, Tulawaka, was closed down earlier this year as it was uneconomic.

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Gold producers squeezed by rising costs and sliding prices – by Tim Kiladze (Globe and Mail – August 12, 2013)

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.

Midway through his master’s degree in geology in the 1980s, Brian Christie trekked to the Red Lake gold mine in Northwestern Ontario as part of a research project. About 930 metres deep, more than one and a half times the CN Tower’s height, the remote mining project was a treat for a geology student eager to make his mark in the industry.

At the time, Red Lake was near the top of the list of the world’s most important gold mines in terms of grade and volume. Even today, after decades of production, some areas of the mine produce 57 grams of the gold per tonne – many multiples ahead of the industry average.

Yet the enthusiasm for projects such as that once drew Mr. Christie to research Red Lake has been undercut by a 10-month slide in gold prices and at least $23-billion worth of writedowns by Canadian gold miners over the past year and a half.

Today, Red Lake’s high-grade gold is found as far down as 2,350 metres, about four times the CN Tower’s height, which shows the difficulty gold miners face in trying to boost their stock valuations even if prices for the precious metal rebound.

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