Barrick’s Sokalsky Says More Asset Sales Still Possible

Barrick Gold Corp. Chief Executive Officer Jamie Sokalsky said there’s still work to be done to improve profitability at the world’s biggest gold miner, and that may include selling more assets.

“We’re going to look at the whole portfolio, but there are a few assets that I think ultimately are probably better in someone else’s hands,” Sokalsky said yesterday in an interview in Toronto, where the company is based.

Barrick, which last month forecast its 2014 gold output would be the lowest in nine years, sold about $1 billion of assets in the past eight months, suspended construction of its delayed and overbudget Pascua-Lama project and started closing its Pierina mine in Peru. More changes are being considered to improve returns, Sokalsky said.

“There are some opportunities that we have and it’s not just about selling assets -- it’s about optimizing the assets that we have,” he said at a Bloomberg event during the Prospectors & Developers Association of Canada convention in Toronto. “It’s about doing better with our assets. It’s not just about looking at our highest-cost assets.”

John Thornton, who will succeed Chairman Peter Munk this year, said in December that hedging output makes sense and is worth considering.

Sokalsky said yesterday the company isn’t considering a return to hedging gold right now.

“We will hedge copper, we’ll hedge silver, we will do some things with oil and other commodities, but ultimately gold is not something we are considering hedging,” Sokalsky said.

Out of Favor

Once a strategy used by Barrick and other major gold producers, hedging fell out of favor in the past decade as companies found themselves locked into lower prices while gold rose. Barrick spent at least $5.6 billion in 2009 to get out of fixed-price sales contracts.

Barrick expects the price of gold to resume its upward momentum this year, Sokalsky said.

“I think ultimately we are going to see gold go back up and challenge the highest we saw a couple of years ago and certainly push up through $1,500 an ounce within the next year,” he said, adding the price may increase to $2,000 within three years.

In 2013, gold futures fell 28 percent to $1,202.30 an ounce in New York, the first annual drop in 13 years.

The company last month forecast 2014 gold production will be 6 million to 6.5 million ounces this year.

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