New M&A strategy as Barrick Gold shifts focus

Barrick Gold Corp. is actively reviewing acquisitions and in the past 18 months considered at least one transformational deal, as it seeks to boost looming production declines and drive growth, four people familiar with the company’s thinking told Reuters.

It marks a shift for Barrick, which has focused on selling assets to reduce debt in recent years, and signals a possible return to familiar territory as the world’s largest gold producer warms back up to dealmaking.

A series of asset sales, including a 50- per cent stake in Argentine gold mine Veladero to Shandong Gold Mining Co Ltd. for US$ 960 million earlier this year, has helped put Barrick on a stronger footing and top its debt reduction target this year.

Toronto- based Barrick, whose gold production has declined every year from 2012 to 2016, has historically been acquisitive but has spent recent years focused on debt reduction. It has drawn ire in the past, like many in the sector, from investors who want mining companies to take a more prudent approach to investing and growth.

That is just what Barrick is hoping to do as it charts a course to selectively scour the mining world for assets and companies. Since the 2013 sell- off in commodity prices, mining portfolio managers have been speaking out against companies about overspending, investments in risky growth and high levels of debt.

Barrick is conscious of that sentiment and has been developing an M&A strategy aimed at allaying investor fears, the sources said.

“We take a highly disciplined approach to all investments, including acquisitions, and will only pursue opportunities that generate clear value for our shareholders and align with our strategic focus,” Barrick spokesman Andy Lloyd said.

Still, investors are expected to respond to any move to dealmaking with caution, the people said.