New Barrick CEO on a mission to restore glory to behemoth’s brand
At 11 a.m. on the nose on Wednesday, Barrick Gold Corp.’s new chief executive Mark Bristow strolled into the company’s 37th floor conference room with a postcard view of Lake Ontario’s frozen shores, and gave a nod to the packed room of bankers, analysts and media. “We’re starting something new here,” Bristow said in South African-inflected English. “Face-toface quarterlies.”
In the first look forward since Barrick closed its US$6-billion purchase of Bristow’s former company, Randgold Resources Inc. earlier this year, he spent nearly an hour providing a detailed look at his plans for the newly combined company.
Since springing into the long empty CEO position at Barrick in January, the 60-year-old geologist said he’s been on a mission to restore glory to the Canadian company ’s brand, which has suffered as its gold production declined, and heavy debt loads ate into profits. Six weeks into the job, he already has swatted away criticism that the company is losing its Canadian focus, since reducing head count at its Toronto office, and because Bristow will not be based here. Although Barrick expects gold production to increase this year to between 5.1 million to 5.6 million ounces, it would be less than the combined output of Barrick and Randgold in 2018, and its costs are expected to be higher: US$870 to US$920 per ounce compared to guidance of US$750 to US$895 per ounce last year for Barrick. “We expect the stock to underperform based on the 2019 guidance,” Alexander Hacking, an analyst with Citi Research wrote, citing the rising costs. Barrick’s stock also has been declining this year, trading down 3.6 per cent to $17.07 at close on Wednesday, and down 7.3 per cent since the start of 2019. Barely mentioned was Barrick’s US$1.2-billion loss last quarter, which resulted from impairment charges on mines in Argentina and Peru.
Bristow’s wide-ranging talk touched many familiar themes: He promised to avoid speculative acquisitions, and not to rush into selling assets. The point of the merger was not to grow production, but to create a company that could build “value” for shareholders, he said.
“We’re not going to be seduced into making these very irrational acquisitions that our industry is so very good at,” said Bristow. “But at the same time, if you stumble, and you have quality (assets), you will find us at your front door.” Many of Barrick’s top executives, including its former chief financial officer Catherine Raw, now responsible for the company’s North American operations, and its new chief financial officer Graham Shuttleworth, who joined the company with Bristow from Randgold, sat in the front row of the room. Missing was executive chairman John Thornton, a former Goldman Sachs banker, who engineered the company’s merger and was said to be in Toronto earlier this week, but does not usually participate in earnings calls. Bristow credited his predecessor — although he didn’t mention Thornton by name — with paying down billions of dollars without diluting shareholders’ equity. But the company mined higher grade material in order to generate desired cash flows to pay down the debt, which cuts both ways, he said.