Barrick scales back on its annual general meeting as mining footprint shrinks

Open this photo in gallery:

No more fancy digs. No free food. And no epic speeches.

In a sign of its more modest state, Barrick Gold Corp. hosted a sharply scaled back annual general meeting on Tuesday, the morning after delivering a first-quarter earnings report that was better than analysts expected.

Of the roughly 100 people in attendance at the AGM in a small conference room at the Cisco Toronto Innovation Centre, around 60 were Barrick representatives. Bankers, analysts, human rights protesters, and a smattering of shareholders filled out the rest.

Barrick’s executive chairman, John Thornton, paid tribute to company founder Peter Munk, who died last month at the age of 90. Mr. Thornton called Mr. Munk, who grew the company from scratch into the world’s biggest gold producer in the span of 23 years, an “iconic Canadian” and a “visionary entrepreneur.”

But a good chunk of Mr. Thornton’s speech on Tuesday was a repeat of the presentation he made to investors in February, stating the need to build ties with China, and stressing that Barrick intends to double down on its mining operations in Nevada.

More accustomed to the plush John Bassett Theatre at the Metro Toronto Convention Centre, Barrick’s former AGM home, which accommodates 1,200 people, long-time shareholder Geoff Richards didn’t know what to make of Tuesday’s affair.

While in favour of the company saving money by relocating to a more modest venue, he was disappointed there was no management presentation – a fixture of former years.

Of graver concern to Mr. Richards, though, is the dismal long-term stock performance. While generally a loyal holder of the stock since the early 2000s, he sold some of his position and put the proceeds into Bank of Nova Scotia.

“You know what the big Canadian banks have done,” he said.

“They make good profits. They pay good dividends, and the shares on the whole go up in value.”

For the most part, Barrick has gone the opposite direction. Humbled by an ill-timed copper acquisition at the peak of the last bull market and massive cost overruns incurred by trying to build a gold mine in the Andes, Barrick has spent much of the past five years shrinking by selling assets to pare down its once-crushing US$13-billion debt load.

But in the clearest sign so far that its debt troubles may finally be behind it, Barrick said on Monday in a release alongside its first-quarter earnings that it has no further need to sell assets to cut its debt. Barrick’s debt stands at a manageable US$6.4-billion, and it will use cash flow and cash on hand to get that down to US$5-billion by the end of this year.

On the horizon over the next few years is mostly incremental growth. Goldrush, a new Nevada mine, is set to begin production around 2022. While the company is hopeful its reserves will grow over time, Goldrush’s proven and probable reserves stand at 1.5 million ounces, which is only slightly more than Barrick produces in a typical quarter.

In recent years, Barrick has seen a dramatic fall in its gold reserves, which have fallen by more than 50 per cent since the end of 2011, from 139.9 million ounces to 64.5 million ounces.

Already significantly smaller than at its peak, the company will get even smaller over the next few years, with its gold production for 2018 expected to be between 4.5 million and 5 million ounces. Last year, its production was 5.3 million ounces, down 3.5 per cent from 2016.