Barrick Gold Corp. (ABX), the world’s largest producer of the metal by sales, is in talks to sell more assets as it seeks to reduce operating costs and focus on its most efficient mines.
The company, which last month agreed to sell three Australian mines, is in talks about selling additional assets in the country, Chief Executive Officer Jamie Sokalsky said yesterday in an interview at the Denver Gold Forum. The Toronto-based company is mulling the sale of other assets around the world and would consider a joint venture with U.S. competitor Newmont Mining Corp. (NEM) in Nevada to reduce costs.
Sokalsky is leading efforts to improve Barrick’s performance and restoring profitability following gold’s steepest quarterly slump in more than nine decades. The company said in August it will either sell, close or reduce output at 12 of its 27 mines that are located across five continents.
“It’s no secret that some of the Australian assets fit the kind of description that I’ve talked about in terms of being non-core and assets that are higher-cost and I think don’t fit well long term with our portfolio,” he said. “We are talking to some people about those assets, and then various assets around the world which I wouldn’t want to name.”
South Africa’s Gold Fields Ltd. said last month it will pay $300 million for Barrick’s interests in the Granny Smith, Lawlers and Darlot gold mines in Western Australia. Barrick also has five other Australian operations, according to its website.
Barrick is getting unsolicited expressions of interest in some of its operations from private-equity firms and smaller mining companies, Sokalsky said. In regards to the possibility of a joint venture with Newmont, both companies have had talks on the idea, which could be revived, he said.
“There are a number of different things we could do that maybe you would characterize somewhat as financial engineering,” Sokalsky said. “We’re getting approached by people on this too.”
Barrick has declined 45 percent this year in Toronto, outpacing the 21 percent drop in the price of gold. The company took $8.7 billion of writedowns in the second quarter, and cut its dividend to improve its liquidity.
Canada’s biggest pension funds are asking Barrick to appoint new independent board members and have said the miner should consider replacing directors who have been there longer than 20 years and are close to Co-Chairman and founder Peter Munk, two investors briefed on the matter said last week. The company said Sept. 17 it will add new directors and strengthen its executive pay policies after investors criticized governance. Sokalsky said yesterday that the selection process continues.
“The board really wants to go through a thoughtful process to make sure that any type of transition is done in the best way possible,” he said. “They’ve had those discussions with shareholders and it is definitely a discussion that the board is taking very seriously.”
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