New York - Barrick Gold, the biggest miner of the metal by sales, is considering shrinking in size as the company focuses on returns over production volumes, chief executive Jamie Sokalsky said.
“Being more profitable is better than being bigger,” Sokalsky said yesterday at the Bloomberg Canada Economic Summit in Toronto.
“If we divested of some of those smaller, higher-cost assets and came down to a suite of assets that are long-lived and lower-cost and more valuable, I think that ultimately that can be a better investment proposition.”
Gold producers are trading at their cheapest in more than a decade relative to the broader market, according to data compiled by Bloomberg, as investors flee the industry amid rising mining costs, project delays and asset writedowns.
Sokalsky, who took over as chief executive of the Toronto-based company 11 months ago, is reviewing growth plans and pursuing asset sales as gold trades at a two-year low and is poised to end a rally that has extended for 12 straight years.
Barrick, the owner or part owner of 27 mines, rose 4.3 percent yesterday to C$19.88 in Toronto.
The company closed at a two-decade low on April 17, losing its position as the top gold miner by market value to Vancouver-based Goldcorp Inc last month.
It makes sense for Barrick to shrink, said George Topping, an analyst at Stifel Nicolaus in Toronto.
Selling the company’s Australian assets would be “a good place to start,” he said.
Barrick is working with Bank of America Corp. and UBS AG on a possible sale of Australian mines, two people with knowledge of the matter said last month.
Resource Nationalism
“At the 8 million-ounce level, with 26 or so mines it’s very difficult to focus,” Topping said yesterday by phone.
“In order to have better managerial control you’re better off with fewer but much larger assets, preferably in the same north-south time zones.”
It’s easier to manage a company with fewer assets, said Sokalsky, 55.
The location of mines has also taken on a greater importance because of an increase in so-called resource nationalism, in which governments seek a bigger slice of revenue.
After a dispute with the Dominican Republic, Toronto- based Barrick on May 8 agreed to amend a lease governing the Pueblo Viejo mine in the country.
The conclusions:
- BG had the pressure on after loosing Pascua lama (Chile Argentina)
- BG lost the mines of Tanzania and China last years
- BG is going to fire sell the Australian mine
- The importance of Pueblo Viejo mine is HUMONGOUS for BG assets
- The rules of the game for pollution had changed for good in affected countries
- These news have affected the price of Barrick Gold stock (ABX) , therefor , their market capitalization.ABX is experimenting a bear market right now.
- They haven't release any statement about the future of the 600 families affected by BG contamination.
- They haven't release any statement about any reforestation program and water treatment program for Cotui-Pueblo Viejo
Event though a lot of people are happy with the financial agreement with BG, some of the inner needs of a lot of Dominicans haven't been fulfill yet like health, employment,heavy pollution,evictions, housing, water, etc, etc.
People is still waiting..
No comments:
Post a Comment