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Barrick Gold Corp. considered buying Kirkland Lake Gold Ltd., but says it ultimately passed because the big Canadian gold miner didn’t meet its standards for investment returns.

Agnico Eagle Mines Ltd. in September reached a friendly agreement to acquire Kirkland Lake in an all-stock, no-premium acquisition worth more than $13-billion. The deal will see Toronto-based Agnico increase its footprint significantly in Canada and Australia, two of the most stable mining jurisdictions in the world.

Earlier this week, Kirkland Lake said in a regulatory filing that it engaged in takeover talks with two other unnamed companies, before agreeing to be bought by Agnico. One of the companies went as far as making an offer for Kirkland, but that was rejected as too low, according to the filing. Talks with the other company went nowhere.

Mark Bristow, chief executive officer of Toronto-based Barrick, said in an interview that while Barrick looked at Kirkland, he did not see sufficient value to pull the trigger.

“We’re religious with our investment filters. It’s hard for things to pass our filters. Therein is the answer,” Mr. Bristow said.

Barrick’s large mines must be able to make a profit even if gold was trading at US$1,200 an ounce, or US$600 below the current level, and that’s where Kirkland Lake fell short.

While Kirkland Lake’s high-grade Fosterville mine in Australia passes the test with flying colours, its low-grade Detour Lake mine in Northern Ontario doesn’t quite fit the bill. While the mine’s all-in sustaining costs are running at US$937 an ounce this year, in the past its costs have been significantly higher. Given that Detour Lake has possibly another 20 years of production ahead of it, it is the long view that Mr. Bristow is concerned about.

Joe Foster, a veteran precious metals portfolio manager with New York-based asset management firm VanEck, says he believes Mr. Bristow is right to be cautious about buying large mines that don’t pass the US$1,200 smell test.

“When you operate a business in which you have no control over the price of a product, that has price cycles that can last for decades, you have to manage your business to survive the bottom of the cycle, which is currently around US$1,200,” Mr. Foster wrote in an e-mail. “So yes, US$1,200 is a prudent price assumption.”

Barrick last made a significant acquisition in 2018, when it paid US$6-billion for Randgold Resources Ltd., the Africa-centric miner that Mr. Bristow founded and ran for two decades. Mr. Bristow now views 2018 and 2019 as a halcyon period, when valuations were cheap owning to the tepid gold price. But now, with bullion trading at just under US$1,800 an ounce, and the field of potential M&A candidates considerably smaller because of consolidation by Newmont Corp., Endeavour Mining Corp., and others, bargains are scarce.

Still, Mr. Bristow remains determined to increase Barrick’s footprint in Canada, where it has only one mine. The company took some baby steps toward that goal this week, striking exploration partnership agreements with two Red Lake, Ont.-focused development companies, Dixie Gold Inc., and Red Lake Gold Inc. One of the oldest gold jurisdictions in Canada, Red Lake used to be the domain of Canada’s Goldcorp Inc. Under the stewardship of maverick investor Robert McEwen, Goldcorp discovered, built and ran one of the most profitable gold mines in the world in the 1990s through the 2000s.

Red Lake eventually fell out of favour as its richest orebodies got depleted, and amid poor management at Goldcorp after Mr. McEwen departed. But over the past few years, the district has shown signs of life again, with a new round of consolidation underway. Australia’s Evolution Mining Ltd. bought the mines that were formerly owned by Goldcorp from Newmont in 2020, and earlier this year acquired development company Battle North Gold Corp.

Another Red Lake exploration-stage company, Great Bear Resources Inc., has also lately excited investors, reaching a market valuation of $1-billion, based almost entirely on promising drilling results. Barrick has been tipped by some analysts as a possible acquirer of Great Bear, but for now Mr. Bristow isn’t giving much away. When asked whether Barrick has designs on Great Bear, he declined to comment.

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