Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX) is a leading global mining company created through the merger of Barrick Gold and Randgold Resources, which was finalized at the start of 2019. Prior to the merger between Newmont Corporation and Goldcorp later that same year, the combined entity was recognized as the world’s largest gold mining company by reserves base. Headquartered in Toronto, Canada, Barrick Gold currently operates 16 gold and copper mines spread across 13 countries, including five of the world’s 10 largest gold mines. As of December 31, 2019, the company had 71 million ounces of proven and probable gold reserves, with guidance for between 4.6 million and 5.0 million ounces of gold production in 2020.
Barrick Gold and Randgold Merger
In September 2018, Barrick Gold announced its plan to merge with London-listed Randgold Resources Limited, an Africa-focused gold mining company, in a share-for-share deal that valued Randgold at $6.5 billion. The combined entity, which would go on to maintain the Barrick Gold brand name, is a leading gold company boasting the sector’s lowest total cash cost, as well as one of the highest EBITDA margins in the industry.
Barrick Gold Seeks to Continue Growth Trajectory
Following its merger with Randgold Resources, Barrick Gold has adopted an aggressive M&A strategy designed to bolster the mining giant’s core asset portfolio. Over the last 18 months, the company opted to divest its 50 percent share in the aging Kalgoorlie mine in Australia to Saracen Mineral for a $750 million consideration, while simultaneously acquiring the 36.1% minority stake it did not yet own in gold miner Acacia Mining (previously spun out of Barrick Gold in 2010) for $1.2 billion. Simultaneously, Barrick Gold placed a bid for Newmont Corporation (which subsequently merged with Goldcorp) resulting in a joint venture between the two companies’ mining operations in the state of Nevada.
More recently, Barrick Gold CEO Mark Bristow has gone on record to state that the company has been seeking to make acquisitions within the copper mining space – with U.S. copper miner Freeport-McMoRan named as a potential target.
Gold Prices Hit Record High in 2020
Gold prices have been on a remarkable run in 2020, breaking above $2,000 an ounce for the first time on record. Having begun the year at $1,515 per ounce, the precious metal has seen a huge surge in demand on the back of widespread economic uncertainty resulting from the COVID-19 pandemic. Global central banks have carried out 144 interest rate cuts thus far in 2020, reducing their rates by a cumulative 5,035 basis points (http://nnw.fm/jzZt0). Meanwhile, the IMF has estimated that global governments have introduced fiscal support measures amounting to over $9 trillion since the start of the pandemic (http://nnw.fm/Or9rI). The resulting weakness in the U.S. dollar and eventual inflationary pressures stemming from these measures have prompted a number of investment banks to boost their near-term outlooks for gold prices, with Bank of America raising its 18-month gold price target to $3,000 an ounce (http://nnw.fm/PQJtc).
Mark Bristow was appointed President and Chief Executive Officer of Barrick, effective January 1, 2019, following completion of the merger with Randgold Resources. Previously, since its incorporation in 1995, Bristow was the Chief Executive Officer of Randgold following his pioneering exploration work in West Africa. He subsequently led Randgold’s growth through the discovery and development of high-quality assets. Bristow played a pivotal role in promoting the emergence of a sustainable mining industry in Africa, and he has a proven track record of delivering significant shareholder value. During his career, Bristow has held board positions at a number of global gold mining companies. He holds a doctorate in geology from Natal University in South Africa.
Graham Shuttleworth, Senior Executive Vice-President and CFO, joined Randgold as chief financial officer and finance director in July 2007 but has been associated with the company since its inception, initially as part of its management team and subsequently as an adviser. As the New York-based head of metals and mining for the Americas for HSBC, he advised numerous mining companies on listings, accessing capital markets, and mergers and acquisitions. Shuttleworth is a graduate of the University of Cape Town, South Africa, with a Bachelor of Commerce and an honors degree from the University of South Africa.
Kevin Thomson was appointed Senior Executive Vice President, Strategic Matters, in October 2014. He was previously a senior partner at Davies Ward Phillips & Vineberg LLP, where he advised many of Canada’s largest and most successful public companies, including Barrick. Thomson is intimately involved in all activities of strategic significance to the company, including the development of partnerships with investors, suppliers and other business partners, strategic legal issues and management of complex negotiations, as well as development of corporate strategy and governance.
Grant Beringer, group sustainability executive, holds an MSc in environmental management, has over 15 years’ experience in the environmental and social consulting industry, and has been extensively involved with environmental and social impact assessments in Africa’s resources sector. From 2014, Beringer was contracted to Randgold to oversee all sustainability-related aspects for the group and then continued to provide sustainability oversight as a member of its environmental and social committee.
- Barrick Gold Corporation was created through the merger of Barrick Gold and Randgold Resources in early 2019
- The company has 71 million ounces of proven and probable gold reserves and has forecast steady gold production of five million ounces per year over the next 10 years
- Gold prices have hit a historic high in 2020, rising above $2000 per ounce for the first time
- Barrick Gold has capitalized on the strong gold price to strengthen its balance sheet in 2020, reducing its net debt by 17% to $1.85 billion, with no significant maturities until 2033
- Analysts project Barrick Gold will grow its earnings by 69% in 2020, well-ahead of the industry average, while paying a dividend that is estimated to generate a yield of 0.99%
- The company is well-positioned to capitalize on the growth in demand for gold, as well as the recent positive price action within the precious metals space