Barrick Gold’s Perfect Storm Peter Munk on Resource Nationalism and the Changing Global Paradigm

The origin of problems according to Barrick Gold

Barrick Gold’s Perfect Storm Peter Munk on Resource Nationalism and the Changing Global Paradigm



“Please understand” … pleaded Peter Munk several times to shareholdersgathered in Toronto on April 24th for Barrick’s annual shareholdermeeting (AGM) as he laid out the reasons why Barrick Gold has lost nearly three-fourths of its company value, why projects are being closed due toenvironmental contamination, and why all of a sudden gold, and Barrick Gold stock in particular, doesn’t look so attractive. The speech is a revelation of what really drives the gold miningindustry and one of the most controversial industry leaders in particular.

Munk was clearly referring to Pascua Lama, the multi-billion dollar goldproject on the Argentine-Chilean border that has become a constant headache forBarrick Gold. The project is riddled with environmental problems and unpredictedand escalating costs, and suffered as a result of the collapse of the financingscheme Barrick hoped to build with subsidized public money from EDC (Canada)and EXIM bank (USA). Today, the mine remains closed in Chile for failure tocomply with environmental regulations. Barrick’s legal appeals have had noinfluence on the Chilean authorities.



A year ago today, Munk boasted that the fundamentals were brilliant.Barrick was on the verge of launching two of the most spectacularly unique goldmines, Pascua Lama in Argentina/Chile and Pueblo Viejo in the DominicanRepublic. Both projects would be characterized by exceptional production, longlife, and some of the lowest average operating costs per ounce. This yearthough, Munk was reduced to asking, “What can I say to you? ...The fundamental stoday could not be more different than they were a mere twelve months ago. Our two mines are both in trouble”. (AGM Speech: Minutes 43:00-44:00)

At both Pascua Lama and Pueblo Viejo, Barrick has run into significant problems.Munk attributed this to growing resource nationalism, which he referred to numerous times throughout his speech. He says it’s a global phenomenon and the underlying characteristic of the new mining paradigm.

He posed the following hypothetical situation to the audience: “You’rethe new president of a small Latin American country… You have two choices, keepon taxing the people… or go after that big multinational huge globalcorporation with billions of dollars of assets. … This is totally understandable, it is the essence of this enormously rapidly growing resource nationalism… It is the ultimate threat to the very lifeline of the mining industry, which ultimately will cause an enormous spike in commodity prices. (Minutes46:00 - 47:00)

He pointedto leaders such as Hugo Chavez of Venezuela and Evo Morales of Bolivia … suggesting that “there’s a whole slew of new modern populist leaders that may not follow the rule of law as we expect them to do”. (Minute 48:00)

While never explicitly stated, it was clear that his critiques were no tso much about Chavez and Morales, but rather referred to his frustration with Argentina and Dominican republic

Ironically, the venting and frustration over host government rule-bendingquickly vanished when Munk came to the issue of executive pay. There, Munk pointed to the impressive CV of newCo-Chairman John Thorton, former Goldman Sachs chief, as a justification for awhopping US$11.9 million pay package from the gold giant to have Thorton takeover Barrick, which has dropped in value by nearly 75% since its recent marketpeak.

In his closing comments, Peter Munk reached out to the essence of whatsustains the gold industry. Companies mine, process and sell gold not forsocial or economic development, not for social progress and not for the benefitof the needy or the poor communities in the countries where Barrick Gold isinvested




So, the conclusion of BG speech:

• Dominican president is as radical and keep the same political lines of as Chavez and Morales
  

• The most important mines of BG are Pascua lama and Pueblo viejo have a populist leader that "dont follow the rules of law"

• BG always follow the rules of law
  

• BG is not in DR for social progress or the needy poor communities of Cotui.
  

• BG never mention pollution, smuggling cyanide, fines, etc so all those "rumors" are probably a lie

• Barrick Gold has lost nearly three-fourths of its company value, shareholders are VERY scare
  

• It's ok to pay somebody a bonus of $11.9 millions made from dominican gold , but not a single dime yet to dominican people
  

source: www.gowebcasting.com/events/barrick/2013/04/24/2013-annual-meeting-of-shareholders/play/stream/7102

These are the personal words of BG president Peter Munk in the last shareholder meeting..
Personally I am speechless ..

You make your own conclusions..

Barrick Gold sticks to its claim over limestone shipment

 
Santo Domingo.- Barrick Gold Corp. on Friday said the shipping manifest filed with the Customs Agency on the six tanks retained for nearly a month are in fact, limestone originally from Portugal worth only 50 dollars.
But Customs technicians said the cargo was shipped from the mine at Pueblo Viejo, Cotuí, a week after Barrick Gold and the Government signed the new agreement


An elnacional.com.do sources revealed that the mining company sought to ship the cargo to Canada, this time with a courier not the usual commercial carrier.

It said the company roused suspicions when it transported the six tanks to Punta Caucedo freight terminal’s Warehouse 10, instead of the customary Warehouse 3.

Another attitude which the source says spurred suspicion is that the company at no time demanded that Customs return the tanks which allegedly contain limestone.

They said the shipment would’ve been sent one week after signing the new contract, "the company still used tricks in the extraction of gold and silver, seeking to circumvent the payment of taxes."

Barrick Gold reportedly set the value of the limestone at 50 dollars, even though a shipping company would’ve charged more than $7,000 to ship it to Canada.
 

 Barrick Gold  set the value of the limestone at 50 dollars from Portugal?
The shipping company would’ve charged more than $7,000 to ship it to Canada.?
The limestone was coming directly from Pueblo Viejo mine?

Something smells very funny there..

Just the manner of declaring the commodity worth $50 is a slap in the face.
 Barricks actions moving the limestone originating from Portugal, subsequently arriving in the RD, and then manifiested to Canada is a de facto declaration of a special utility which adds value to the product.

 ¿ Is it worth the expense to ship ? Barrick thinks so.

Note: Gold is found in limestone deposits. Could it be the limestone was sent to Barrick in the RD for analysis ?

The actions by Barrick It do not pass the smell test.

Barrick's share holders have not gotten a whiff of it yet.

Dominican government, Barrick Gold strike mine deal; reports

Santo Domingo (hoy.com.do).- After a marathon meeting Tuesday  the Dominican government and Barrick Gold Corp. reached a tentative agreement to amend the Pueblo Viejo mine contract, although how a new tax would be levied was left pending, local media report.

Canadian miner executives John Lawson Thornton, Calvin Francis Pon, Alann Hjordis Heath, Derek Hudson Burney, Kelvin Paul Michel Dushnisky, Andrew Lloyd and Curtis Arthur Johnson arrived in the country Monday noon and met with government officials headed by Presidency chief of staff Gustavo Montalvo.
 On Tuesday president Danilo Medina said he hopes to strike a deal. "It’s a negotiation. You start with endpoints and reach a midpoint. God willing a midpoint will be reached today (Tuesday)."

 


There should be more scrutiny focus on the  ambiguity of Customs and the laws of a mining country that in   an act of ignorance or  permissiveness, haven't even care to purchase a lab that allow to detect  dore and other metals, taken away from DR  under the shadow of night ... Towards a rising movement  that bet on softening popular anger against the mining activity of BG and his deadly pollution, after being fine tuned with the same money that has come out of the  innards of our land ... Towards the talks between the Government and the arrogant company that haven't pay a dime to the Dominican government yet...

We dominicans are so feed up with lame excuses  from BG, who got a 48 BILLION gold mine for free, over and over and over..

In this case we only hope that the final deal would be beneficial to the VERY poor communities around Barrick Gold, where children can get an education , people can go to the hospitals, people can get a decent job, not a total pollution or a total devastation situation ..At the end,we are not asking for too much, just that  people can get a REAL and decent way of living..

 On February 27, in the  National Assembly, President Danilo Medina created great expectations to raise the urgent need to review the contract with Barrick Pueblo Viejo. And the people took his word. A double-edged sword. Now many people expect him  to act under the power of his own  speech.

And we do not ask much. Just ask him to be thoughtful and not give in to blackmail or urban legend  from the powerful mining company. Do not delay the awaited good news for the whole country.
Again , we hope that God give wisdom and patience to the Dominican leaders, so the deal would be really beneficial to a third world country like Dominican Republic