Barrick Gold Corp. and Newmont Mining Corp.’s chief executives still want to find ways to join forces in Nevada after the gold companies’ plans to merge dissolved spectacularly.
“There are opportunities to work together from an operating standpoint, particularly in Nevada, given we are partners there and given we are neighbours,” Barrick’s chief executive, Jamie Sokalsky, said in an interview.
“Both myself and [Newmont chief executive] Gary Goldberg are very open to reopening those discussions,” he said.
It’s been a month since Barrick and Newmont’s merger talks imploded with the companies’ chairmen publicly accusing each other of ruining their $13-billion (U.S.) union. Since then, the world’s two largest gold producers have taken a breather from each other and are mending their relationship, with Mr. Sokalsky and Mr. Goldberg as de facto emissaries.
Mr. Sokalsky said there “certainly aren’t any” merger discussions currently taking place.
But he said there was a “friendly, co-operative spirit” between the companies after the public spat between Newmont’s chairman, Vincent Calarco, and Barrick founder Peter Munk and chairman John Thornton.
Under the defunct merger plan, the companies had identified $1-billion in cost savings, most of which were expected to come from Nevada where Barrick operates six mines and Newmont has 18. Although the miners have tried to merge in the past, their latest round of negotiations became more pressing because of the steep drop in gold prices.
Toronto-based Barrick, Colorado-headquartered Newmont and the rest of the gold industry have overhauled operations to deal with the weaker precious metal prices. The companies would have consolidated their Nevada operations and lumped some of their more expensive Australian and Asian assets into another company.
Mr Sokalsky said Barrick of today is a very different company than the one that used to aggressively pursue growth. The Newmont acquisition would have fit in to Barrick’s new strategy of cost reductions and mine improvement.
The miner, the world’s no. 1 gold producer, spent 2013 improving operations after ruining its balance sheet by buying a copper company and mismanaging its key Pascua Lama project in the Andes. Barrick divested higher-cost mines, reduced its debt, cut jobs and its dividend and mothballed Pascua Lama, where costs had jumped to $8.5-billion.
The company is now on track to produce between six and 6.5 million ounces this year, about 15 per lower than last year and a third less than the nine million ounces the miner once aimed to produce.
Mr. Sokalsky said production “could go lower if we sell some other assets.” Though he said the list of potential assets on the chopping block would not be as “extensive as last year.”
In another shift in strategy, Mr. Sokalsky said the company will now develop projects in stages instead of spending billions of dollars to build the biggest mine possible, as it did with its $4-billion Pueblo Viejo mine in the Dominican Republic and Pascua Lama. “We have learned our lessons from going out and building these massive projects,” he said.
If the Barrick-Newmont merger had succeeded, Mr. Sokalsky would have relinquished the top management job to Newmont’s CEO and become chief executive of a spun-out company. He joined Barrick in 1993, rising through the ranks to be appointed CEO in 2012 when Barrick fired former executive Aaron Regent as gold prices started to plunge.
As for his future, Mr. Sokalsky said that after working through two of the toughest years at Barrick he would like to help take the company to the next stage.
“I feel I have the confidence of the board in endorsing the strategy,” he said.