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Mark Bristow, chief executive officer of Barrick Gold, in 2019. After enduring billions of dollars of writedowns and adding boatloads of debt, he has a new mantra for Barrick: 'We’re not putting our balance sheet at risk.'Mike Hutchings/Reuters

Two and a half years into his tenure as Barrick Gold Corp.’s chief executive, Mark Bristow is sticking to the party line, reassuring investors that miners have learned from past mistakes and will not overpay for deals.

“We blew our brains out over the last big bull market,” he said in an interview Monday. After enduring billions of dollars of writedowns and adding boatloads of debt, he has a new mantra for Barrick: “We’re not putting our balance sheet at risk.”

But Mr. Bristow is a conflicted man, because in almost the same breath he acknowledges that he would love for Barrick to get bigger. After all, this is a man who, without hesitation, publicly floated merging with giants Newmont Mining and Freeport-McMoRan in the past, only to be rebuffed.

Although those giants are currently out of reach because their shares have performed better than Barrick’s of late, Mr. Bristow still sees expansion as a necessity. “If you’re larger, you attract generalists on to your register,” Mr. Bristow said on a conference call Monday after the miner reported quarterly earnings. “And this industry needs consolidation by that very thesis.”

The average fund manager and retail broker may not pay much attention to miners any more, not after the calamity that was the last decade, but they will, for instance, happily buy exchange-traded funds that invest in large cap companies.

Mr. Bristow also says the industry is “fragmented,” and warned that miners “are not replacing the ounces we’re mining with the same quality ounces,” he said on the call. “That’s why I’m a big proponent of at-market transactions” – which are takeovers with no purchase premiums paid.

Shortly after, Mr. Bristow added some asterisks. “The challenge is finding the right asset,” he said in an interview with The Globe and Mail. “I don’t particularly worry about the cost – what’s important to me is the relative quality of the asset.”

The last time Barrick splurged on a deal, the miner bought Randgold Resources for US$6-billion, run by Mr. Bristow – which is how he became Barrick’s CEO. But the market was very different then and many gold miners’ share prices were suffering. Quality names are more expensive than Barrick now.

“You just can’t go big without quality, because you get killed on the down cycle,” Mr. Bristow said. In his search for potential assets, Mr. Bristow applies a US$1,200 filter, meaning any target needs to be profitable at that gold price. “There are very few assets that meet that,” he said.

While he waits, perhaps for another market swing, Mr. Bristow is happy to provide some special dividends to shareholders, with Barrick just having paid its second of the year. The CEO is also pushing an expansion strategy through Barrick’s existing assets, because he is adamant that the gold industry does not deploy enough capital to replace depleted reserves. “If we don’t do anything, we are going to run into a wall. Guaranteed,” he said.

To his mind, if gold miners do not spend now, when the bullion price is still around US$1,700 an ounce and industry cash flows are strong, there will be trouble during the next downturn. “When the commodity price goes against you, you can’t find money for love.”

So Barrick is investing in itself, and that’s buying time to wait out the notoriously cyclical industry. “I’ve got 10 years of runway ahead of me,” Mr. Bristow said, attributing it to Barrick’s reserves.

Investors, though, aren’t yet sold on the strategy. Even with gold hovering around US$1,700 an ounce, Barrick’s shares closed at $25.83 Monday – a price they traded for in 2003, when gold was selling for roughly US$375 an ounce.

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