Barrick may have lost more than Munk
With Randgold merger, Canadian gold miner passes into history
“There are analysts who a year ago wouldn’t touch Barrick. There are analysts who don’t like the colour of my hair.”
I didn’t write about Peter Munk when he died this past March at the age of 90. But Monday being voting day, in which the merger between Barrick Gold Corp. and Randgold Resources Ltd. will be consummated, seems an appropriate time for an elegy.
I can’t state with certainty the first time I interviewed Munk, but it must have been around 1987 or so. Perhaps earlier. In my memory it was thought by some editor somewhere that handing a youngish woman the mining beat might be a bit of fun, though I didn’t have to write the regular Drill Hole Diary feature, thank goodness.
Clues may lie in dusty newspaper clippings boxed somewhere in a cob- webbed corner of the basement, should they exist at all.
In the mid-’80s, Munk had emerged quite suddenly as a man with a mining mission, initially focused on oil and gas, a strategy he would later describe as “uniquely unsuccessful.” The pivot to gold drew earned derision, given his background creating, with David Gilmour, Clairtone Sound Corp. and its Project G sound system, which was gorgeous, state of the art and
ultimately went bankrupt. Subsequent adventures in the South Pacific brought, initially, the Khashoggi brothers as investors (Adnan and Essam) and, ultimately, financial success as the endeavour grew to a 50-hotel chain.
So who could blame the mining analysts who had no patience for Munk’s latest pitch: a great big open pit gold mine, in Nevada of all places. The Carlin Trend had been developed and tapped since the ’60s. There was little credence given to a new site that had been scoured and scoured and which, Munk promised, would be transformed into a six-by-threekilometre crater that would produce 15 million ounces of gold.
He described its potential as “a great canyon,” and recalled in our first interview how a New York mining analyst hung up on him mid sales pitch, but not before snapping “bunch of bullshit artists.” Little surprise, given how many miners before had taken a pass on gold so disseminated, so microscopic as to be deemed of little value.
I was curious enough about the promise of the glittering metal that I talked my then editor into letting me travel to Elko, Nev., to see for myself. This was so long ago it’s easy to forget that the precious metal had become detached from the gold standard merely a decade before, and had crazily, if briefly, charged from the standard $35 (U.S.) an ounce to a stratospheric $850 in January 1980. The price collapsed soon thereafter, but with the price bobbling around, say, $400, there were fortunes to be made by low-cost producers. What became known as the Goldstrike mine turned into a glittering success. Of course it wasn’t Munk that made it that, not on the ground, anyway. I don’t recall if I interviewed Larry Kornze, the Barrick geologist who helped discover the Betze deposit. I did interview Bob Smith, who developed Goldstrike and thereby elevated the region into the largest gold producer in North America. Smith was as aligned with the heart of the Canadian mining community as Munk was aligned with an international jet set that made skiing at Klosters an annual event.
I’m not going to recount here Munk’s full corporate history: the creation of TrizecHahn (real estate), the failed bid for Bre-X Minerals (lucky for him), the laggardly addressing of the alleged rapes and gang rapes of local women by security guards at the company’s Porgera mine in Papua New Guinea, first reported by Human Rights Watch (the company reached an out-of-court settlement with EarthRights International, representing the women, in 2015), the unconscionably rich financial re- wards showered upon Barrick executives. Munk stepped down as Barrick chair in the spring of 2014.
The story is far too sweeping for columnizing.
But what stands out on merger day is what has been lost.
The Ontario that opened its doors to Munk in 1948 was, he told me once, “the most industrialized, most fertile economic playground.” To the 20-yearold Hungarian émigré, this province was “the heart of the Western world.”
It was still that in the mid-80s. Sure there were tough times. But there was Falconbridge and Inco. Ontario was a mining powerhouse. And then Switzerland’s Xstrata took over Falconbridge (now Glencore Canada) and Brazil’s Vale took over Inco and Munk railed against the diminishing light of the province, especially the squandering of opportunity to create acquisitive global leaders.
Instead, we became the acquired.
“I was outraged,” Munk told me in 2009. “I thought it was unacceptable that we lost in four years 100 years of job creation, wealth creation.”
On Monday, shareholders will vote on the making of a new colossus, creating, the companies say, “the greatest concentration of Tier One Gold assets in the business.” Barrick investors will find themselves invested in the Democratic Republic of the Congo, holding shares in a company now run by Randgold executives from afar.
I can’t imagine that executive chairman John Thornton will hang around for very long.
Perhaps I’m wrong about that.
But my sense is that when Munk passed away in the spring, Barrick was still seen as very much his company. That’s about to change.