Review of Barrick’s asset base

The merger of Barrick Gold (GOLD) and Randgold Resources will be a step toward improving the combined entity’s shareholder returns. Through the merger, the companies intend to achieve sector-leading (GDX) (JNUG) returns. To achieve these returns, the new Barrick will undergo a critical review of its asset base and decide whether to dispose of some of its assets.

The company plans to concentrate on only Tier 1 assets. Barrick’s executive chair, John Thornton, explained during the company’s third-quarter earnings call that Tier 1 assets are those with the following properties:

  • produce more than 500,000 ounces per year
  • have mine lives greater than ten years
  • are on the lower half of the cash-cost curve

Barrick Could Emerge Leaner and Stronger after an Asset Review

Strategic changes

The company is planning to initiate a number of strategic changes, including asset sales and new investments, in February. The assets under review for disposal include its 50% stake in the Kalgoorlie mine in Australia, its Hemlo gold mine (GLD) in Canada, and its Lagunas Norte mine in Peru.

Leaner and stronger

In an interview with Sky, CEO Mark Bristow said, “There is a cleanup moment.” He added, “The positive is there is nothing radioactive anymore in the Barrick portfolio. So there isn’t any stress to do things under duress. We are going to be very considered in the way we approach things. We want to deliver high-quality assets that can attract the investment required.”

Bristow is also focusing on making Barrick leaner and automating and streamlining both its operations and management. The new Barrick will also use contractors for the jobs the company doesn’t have the skills for, which is Randgold’s strategy.

Newmont Mining (NEM), Goldcorp (GG), and Kinross Gold (KGC) have also restructured their portfolios to become leaner so as to weather the precious metals price cycle more effectively.

Latest articles

23 Jul

Will Fortinet Beat Q2 Earnings Estimates?

WRITTEN BY Aditya Raghunath

Leading cybersecurity company Fortinet (FTNT) is scheduled to announce its second-quarter earnings results on August 1. What should we expect?

Harley-Davidson’s Q2 earnings were slightly better than estimates.

Netflix (NFLX) has long relied on international markets to drive its streaming video business growth.

23 Jul

Could Ford’s Q2 Earnings Push Its Stock Even Higher?

WRITTEN BY Mohit Oberoi, CFA

Ford's second-quarter earnings results are scheduled for release on July 24. So far, Ford stock has outperformed its legacy peers.

23 Jul

Why RBC Isn't Optimistic about BlackBerry Stock

WRITTEN BY Aditya Raghunath

Shares of BlackBerry (BB) have been volatile over the last 12 months. BlackBerry stock fell 40.5% from $12.0 in September 2018 to $6.57 in December.

According to a Wall Street Journal report, Apple (AAPL) could be interested in buying Intel’s modem chip business.