Barrick Gold Corporation

http://www.bloomberg.com/

May 22 (Bloomberg News) — Barrick Gold Corp. (ABX), the biggest miner of the metal by sales, is considering shrinking in size as the company focuses on returns over production volumes, Chief Executive Officer Jamie Sokalsky said.

“Being more profitable is better than being bigger,” Sokalsky said yesterday at the Bloomberg Canada Economic Summit in Toronto. “If we divested of some of those smaller, higher-cost assets and came down to a suite of assets that are long-lived and lower-cost and more valuable, I think that ultimately that can be a better investment proposition.”

Gold producers are trading at their cheapest in more than a decade relative to the broader market, according to data compiled by Bloomberg, as investors flee the industry amid rising mining costs, project delays and asset writedowns.

Sokalsky, who took over as CEO of the Toronto-based company 11 months ago, is reviewing growth plans and pursuing asset sales as gold trades at a two-year low and is poised to end a rally that has extended for 12 straight years.

Barrick, the owner or part owner of 27 mines, rose 2.1 percent to C$20.29 at 9:43 a.m. in Toronto. The company closed at a two-decade low on April 17, losing its position as the top gold miner by market value to Vancouver-based Goldcorp Inc. (G) last month.

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TORONTO – Gold mining stocks have been decimated in recent months, but Jamie Sokalsky does not think investors should expect any corresponding uptick in M&A activity.

Speaking at the Bloomberg Canada Economic Summit, the chief executive of Barrick Gold Corp. said there is a general “anti-M&A” mood in the gold space right now, and that investors don’t even ask him about it much anymore.

“It’s a lot harder to sell assets now than it would have been a year or two ago,” he said, adding that it is a “buyer’s market.”

Until recently, Barrick would have been taking advantage of a buyer’s market to snap up almost anything that caught its eye. But as the company shifts its focus from growing production to growing profitability, it is trying to dump its smaller and higher-cost mines rather than purchase anything new.

The Toronto-based miner has stated that its oil, nickel and Tanzanian gold assets are on the block, and sources confirmed to the Financial Post that its Australian gold mines are being shopped as well. Other seniors are also keen to shed non-core assets to upgrade their portfolios.

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

When the Pueblo Viejo mine entered commercial production early this year, it took about 20 seconds for politicians in the Dominican Republic to demand a bigger piece of the pie from the two Canadian owners (Barrick Gold Corp. owns 60% and Goldcorp Inc. owns 40%). Negotiations ensued and a revised agreement was announced Wednesday night.

After taking some time to chew it over, analysts weighted in on Thursday morning. Their views are decidedly mixed: the deal is positive in that it removes the political overhang, but negative in that it takes substantial benefits away from shareholders and hands them to the government. Also, payments to the government will be brought forward.

A number of changes were made to the Pueblo Viejo agreement, including the elimination of a 10% return embedded in the initial capital investment before a 28.75% tax kicks in, an extension to the period in which the miners recover their capital investment, a delay in the application of tax deductions, and a reduction in depreciation rates.

Barrick calculated that the total economic benefit to the government will rise by US$1.5-billion in this agreement, assuming a US$1,600 gold price. The Dominican was already expected to receive more than US$10-billion from the mine.

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

This is an edited and condensed excerpt of comments by Peter Munk, co-chairman of Barrick Gold Corp., at the company’s annual meeting in Toronto Wednesday.

Gold price and resource nationalism change the industry

A year ago, the fundamentals for Barrick Gold were brilliant. Results were exceptional, optimism about gold prices was universal, we were riding high, our financial rating was the highest in the industry, we were the unquestioned global leaders. Barrick at that time was looking forward to the next 12 years and to opening up two of the most spectacularly unique gold mines, Pascua-Lama and Pueblo Viejo.

The fundamentals today could not be more different. Our two mines are both in trouble. Our write offs and capital commitments have multiplied. Gold itself is under attack. So there is pessimism about the industry.

And there is ever-growing resource nationalism. It’s understandable. You’re sitting there, the new president of a small country, and you’ve just been elected, you’ve got serious issues with your budget, you’ve got two choices: keep on taxing the people or go after that big multinational huge global corporation with billions of dollars in assets and say: “Now hold on. We signed this contract with you a few years ago. We wouldn’t have signed that contract had we known that gold was going to $1,500.”

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

TORONTO – Barrick Gold Corp. said it would “carefully consider” an unprecedented rejection by shareholders of the company’s executive compensation plan on Wednesday, even as management strongly defended a record payment given to the co-chairman.

The rejection at Barrick’s annual meeting here was a direct challenge to a board that last year agreed to pay US$17-million to co-chairman John Thornton, which included a staggering US$11.9-million signing bonus.

Barrick founder and chairman Peter Munk was defiant during the meeting, defending his company’s decision to bring on Mr. Thornton, a former president at Goldman Sachs.

“We had to secure him,” Mr. Munk told shareholders. “The right thing was to have this advanced investment … to secure the kind of access he could give us and the credibility he could provide us with in securing major capital.”

Under the terms of his hiring, Mr. Thorton had to invest the bonus in Barrick shares, which he did in December, paying a market price of about $33.50. The compensation vote is non-binding, but Barrick CEO Jamie Sokalsky said management would carefully consider the views of shareholders. In a second vote, shareholders agreed to re-elect all 13 directors to Barrick’s board.

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Barrick Gold Corp.’s quest for growth turned it into the world’s largest gold company. Founder and chairman Peter Munk says that’s also what helped send it off the rails.

It would be difficult to imagine what more could have gone wrong for Toronto-based Barrick over the past year. It started with the replacement of its chief executive officer in June of last year, followed by a multibillion-dollar cost overrun at Pascua-Lama, the ambitious gold project it is building in the Andes. The company also took a $3.8-billion charge on a highly-criticized copper acquisition. The company’s stock price has plunged to around 20-year lows.

“If you add to that the softening of the gold price, if you add to that that we had a major writeoff in our copper business … by the early part of this year, it really felt, it really smelt, and it really looked like, the perfect storm,” Mr. Munk told shareholders at the company’s annual meeting Wednesday.

And the bad news continued, as Barrick said Wednesday that it would consider suspending the Pascua-Lama project altogether after a court ordered construction halted in Chile amid allegations the project is polluting local groundwater. Experts say a resolution to the problem could be as much as six months away and add up to $500-million to costs.

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Public revolts by shareholders are uncommon in Canada and no major company has ever suffered the ignominy of losing a say-on-pay vote. That could change Wednesday.

Barrick Gold Corp., once the largest gold miner in the world, is headed for a showdown with a prominent group of shareholders over executive compensation. Seven of Canada’s largest pension funds are fuming over a US$11.9-million signing bonus the Toronto-based company awarded former Wall Street investment banker John Thornton to join the company as co-chairman last year. Juxtaposed against the 54% plunge in value for Barrick’s stock price during the past year, Thornton’s eye-popping bonus “is outrageous,”says Richard Leblanc, a governance expert and associate professor at York University in Toronto.

A group of seven major institutional shareholders have threatened to demonstrate their displeasure by voting against an advisory resolution on executive pay and withholding votes in the election of directors who comprise Barrick’s five-member compensation committee during the company’s annual shareholders meeting Wednesday in Toronto.

The group of seven, which collectively manages assets worth more than $900-billion, fired off a letter to Barrick founder and chairman Peter Munk, outlining their grievances against the “inducement,” arguing it is “inconsistent with the governance principle of pay-for-performance,” while setting a “troubling precedent in Canadian capital markets.”

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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.

MONTREAL — Shareholder meetings are usually dull, scripted affairs. It’s rare that anything eventful happens in the hotel meeting halls where they are set.

Even when a proxy fight threatens to disturb these gatherings, a last-minute truce is often brokered to avoid a public spat and an embarrassing defeat. Remember Canadian Pacific Railway’s acrimonious battle with activist investor Bill Ackman? It got resolved in the wee hours of the night behind closed doors, not in front of cameras.

But Peter Munk is not one to cave in, and Barrick Gold, the gold producer he founded 30 years ago, is still standing its ground in its showdown with Canada’s most powerful pension fund managers over the $17-million (U.S.) compensation awarded to its new co-chair, John Thornton.

In a statement Tuesday afternoon, the company said: “The Barrick board takes the shareholder vote seriously and intends to carefully consider our shareholders’ perspectives regarding executive compensation matters,” it said. Translation: We hear you.

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http://www.bloomberg.com/

April 23 (Bloomberg) -– Barrick Gold Corp. (ABX) founder Peter Munk sees a successor in former Goldman Sachs Group Inc. (GS) President John Thornton as the world’s biggest gold miner tries to reverse a 54 percent plunge in market value in the past year.

“I searched the world for a successor,” Munk, the 85- year-old chairman of Barrick, said yesterday in an e-mailed statement. “I am delighted I found John. I am confident he will take Barrick to a new level as a global player.”

Thornton, 59, faces his first annual shareholders’ meeting tomorrow as co-chairman after the Toronto-based miner has struggled with cost overruns, writedowns, and opposition to his $11.9 million signing bonus from shareholders including Canada’s six largest pension fund managers.

Barrick, which also reports first-quarter earnings tomorrow, this month lost its position as the top gold miner by market value to Goldcorp Inc. (G), which produces fewer than half the ounces of the precious metal. It’s “appropriate” that the company considers a path to new leadership at a board level, Munk wrote in Barrick’s annual report filed March 25.

“My job was to develop the strategic vision, seek new opportunities, develop strong partnerships, build relationships with government leaders, and navigate some of the tough environments we work in,” Munk said in the e-mail yesterday. Thornton has those skills, he said.

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