‘When it comes to M&A people just shoot in the dark’ – Bristow

Mark Bristow, CEO, Barrick Gold

BARRICK Gold CEO Mark Bristow repeated his usual mantra of “organic growth to maximise shareholder value” on the sidelines of the Mining Indaba conference, predicting a 30% rise in production to more than 6.8 million ounces of gold equivalent production (which includes copper output) by 2031.

He’s sticking to this despite close questioning over the bout of recent speculation that Barrick may be close to doing a major merger deal and, in particular, that it was looking at Zambian copper producer First Quantum Minerals.

The closure of First Quantum’s Cobré Panama project has placed enormous pressure on the Toronto-listed firm’s balance sheet. CEO Tristan Pascall said recently the company was not considering selling the company but will divest of the firm’s smaller mines. Bloomberg News reported in January that Bristow had asked First Quantum’s largest shareholders for their reaction to a Barrick takeover approach.

“Remember 2011? Gold prices up. Copper prices up. Everybody ran around and bought stuff. They did not say ‘let’s invest in our future; let’s use some of this windfall to do something positive’. And by 2015 everyone was barely surviving.

“When Randgold completed the merger with Barrick in 2018 the thing we did not do was bow to the request of instant gratification from many fund managers and just keep pumping money out on dividends.

“We built a proper balance sheet. We paid back debt. We invested $7.5bn in fixing the assets. Remember, most of those assets were closed operations in countries like Tanzania, Pakistan, Papua New Guinea and Argentina.

“But we now have a portfolio that is working. So, when you look at the value per share from the time we (Randgold) got involved to where we are now, we are at a substantial premium to that value. Barrick today is a different company because we do not have to buy things to deliver on our long term plans.

“If you look at our peer group it is not the same picture. People will say Newmont is the best performer because it is bigger but look at the value created.

“I am absolutely clear. We will stick to our knitting. High quality, long-term growth and we have geologists prospecting in every single copper/gold province in the world except for Australia and Russia.”

But – and it’s a big but –  Bristow throws in the caveat that: “I have always been interested in M&A transactions”.

His track record stands up. There was the initial merger of Randgold with Barrick which Bristow swiftly followed up on by making a bid for Newmont. He did not get all of Newmont out of that but he did get a merger – plus management control –  of the merged Nevada gold assets of the two groups.

So – to repeat the question – what precisely is Barrick doing about M&A right now?  Bristow replied: “If you were to appreciate the number of due diligences we have done (since 2018) – we have looked at everything; we have models on everything but the big thing is that – so far – we have turned them all down.

“When the right one arrives and it makes sense then we will pull the trigger, but we have not got there yet.”

Pressed yet again on the speculation around First Quantum Bristow replied: “People shoot in the dark on this sort of thing. It is not something we will comment on.”