Barrick CEO change could trigger asset sales, takeover: analysts

[Redator]

Leadership changes at two of North America’s biggest miners open the door to asset sales and even a potential takeover of Barrick Mining (TSX: ABX; NYSE: B), analysts say.

On Monday before stock markets opened, Toronto-based Barrick announced the surprise resignation of president and CEO Mark Bristow, who stepped down without explanation after more than six years in charge. That same morning, larger US-based rival Newmont (NYSE: NEM) said CEO Tom Palmer would retire from his position Dec. 31 and make way for chief operating officer Natascha Viljoen. Mining analysts insist the moves are coincidental.

Mark Bristow in shock departure from Barrick

Bristow’s departure came less than two weeks after Barrick said its Fourmile project in Nevada has the potential to produce as much as 750,000 oz. of gold per year, which would position it as one of the most significant discoveries of the past 25 years. The disclosure, made Sept. 15, sent Barrick’s Toronto-traded shares up about 20% over the following six trading sessions.

“We see a potential shift in the company’s strategy” with Bristow’s exit, Jefferies Securities mining analyst Fahad Tariq said this week in a note. “Given the market’s recent positive reception to Barrick’s growing Fourmile deposit in Nevada, we see focus turning to that region. We would not be surprised if the company reduces exposure to geopolitically sensitive regions.”

Spokespeople for Barrick and Newmont didn’t immediately respond to e-mailed requests for comment for this story.

Barrick shares lag

Under Bristow’s leadership, Barrick’s share price has underperformed those of its global peers due to surging costs and repeated profit-target misses.

Through Thursday, Barrick’s Toronto-listed shares have increased about 2.6 times since January 2019, trailing the fourfold increase of the TSX Global Gold Index and the tripling of Newmont’s US-listed shares. Barrick fell 0.3% to C$47.24 apiece Friday afternoon in Toronto, cutting the company’s market value to about C$80 billion ($57 billion). Newmont, meanwhile, rose 0.5% to $86.90 in New York.

Bristow’s departure “was a decision of the board and may have been related to stock underperformance vs peers in recent years,” BMO Capital Markets analyst Matthew Murphy said in a note. “The market may also speculate about value-creation opportunities to offset any potential decline in multiples.”

Historic climb

The leadership changes took place during a week when gold reached yet another historic high, touching $3,895.09 per oz. on Wednesday. That boosted the yellow metal’s gain since the start of the year to about 45%.

Fueled by strong structural demand from central banks and easing from the US Federal Reserve, gold could hit $4,000 an oz. by mid-2026, Goldman Sachs forecast Tuesday. Central banks – especially those in emerging markets – have stepped up the pace of gold purchases about fivefold since 2022, and the New York-based investment bank expects them to keep accumulating bullion for three more years.

“We view this as a structural shift in reserve management behavior, and we do not expect a near-term reversal,” Goldman Sachs analyst Lina Thomas wrote.

Varied portfolio

Some investors have shunned Barrick stock due the company’s geopolitical-risk profile. This includes Barrick’s decision to operate mines in Mali and a planned multi-billion-dollar investment in the Reko Diq project in Pakistan, Tariq said.

Barrick’s asset portfolio now spans 18 countries and four continents. It includes 14 gold mines and three copper mines.

North America accounts for 46% of Barrick’s gold production, compared with 37% for African and Middle East operations and 16% for Latin America and Asia Pacific, company data show.

It’s a different story in copper, where Africa and Middle East operations make up 79% of total output, compared with 21% for Latin America and Asia Pacific.

Feats and fights

A South African national, Bristow joined Barrick in 2019 following the company’s merger with Jersey, UK-based Randgold Resources.

Key achievements on his watch include the integration of Randgold, $6.7 billion in shareholder returns and major cuts in debt.

He also leaves with the company mired in an increasingly bitter dispute with Mali over the Loulo-Gounkoto gold complex. Barrick suspended operations at the mine, its largest African asset, in January after Mali’s military government seized about three tonnes of gold over alleged unpaid taxes.

Having demanded a greater share of profits, Mali jailed four Barrick employees last November. It also issued an arrest warrant for Bristow the following month, blocked exports and placed Loulo-Gounkoto under state control. That led Barrick to book a $1 billion impairment charge in August and slash the carrying value of its 80% stake in the mine.

“As a standalone company or in a takeover, we expect that rationalization of Barrick’s portfolio would make sense, as we believe operational underperformance was a symptom of too many assets to manage,” CIBC Capital Markets analyst Anita Soni said this week.

Merger of giants?

News of the CEO change “will spark investor interest in Barrick, with Newmont potentially interested,” she added.

Colorado-based Newmont and Barrick know each other well. The companies are partners in Nevada Gold Mines, the world’s largest gold mining complex. 

Barrick owns 61.5% of the JV and is the operator, while Newmont holds the 38.5% balance. The complex contains nine underground mines, 12 open pit operations, two roaster facilities, two autoclave facilities, 1 flotation mill, two oxide mills, eight heap leach facilities, 14 ranches, two power plants and one warehouse.

While Barrick owns 100% of Fourmile, the project will eventually be rolled into the company’s Nevada Gold Mines joint venture with Newmont at fair market value if certain criteria are met.

Barrick says Fourmile could produce up to 750,000 gold oz annually

Barrick has said it plans to advance Fourmile over the next few years. It expects to complete a feasibility study around 2029.

An updated preliminary economic assessment released last month outlined average output of about 600,000–750,000 oz. gold a year over more than 25 years on 1.5–1.8 million tonnes of mined material. Initial capital was pegged at about $1.5–1.7 billion, with a life-of-mine all-in sustaining cost of about $650–$750 per ounce, Barrick said.

Value driver

Fourmile’s future advancement “both increases the medium-term growth outlook for the company and presents a significant value driver given the high-grade nature of the deposit and proximity to existing infrastructure,” National Bank Financial analyst Shane Nagle said.

Nevada Gold Mines’ increased value “presents a more economical opportunity for Newmont to acquire Barrick ahead of more significant advancement,” Nagle added. Still, he said, “government/regulatory approvals are likely to impede any planned combination.”

Barrick eyes 30% production growth by 2030

None of this will be a matter for Bristow – though perhaps it will be for his immediate successor, Mark Hill, a 20-year company veteran who was named interim CEO. Hill previously oversaw the miner’s Latin American and Asia Pacific regions.

Barrick’s board is conducting a global search for a permanent successor to Bristow with the help of an external search firm. It hasn’t disclosed a timeline.