Barrick Mining Corp. (ABX:TSX; B:NYSE) announced the sudden departure of President and CEO Mark Bristow, who had been in the role for seven years, since Barrick and Bristow's former company, Randgold, merged.
Although there had been rumors (see Bulletin #980) that the board was unhappy with Bristow, in particular the weak stock price (until recently), his missed opportunities to establish a presence in Canada, and his failure to fix the protracted mess in Mail, the timing and the matter of the departure were abrupt.
It was clearly not planned and not friendly: no reason for his departure was given; he was not quoted in the company press release; it was effective immediately; and only an interim replacement was named.
Bristow Was Turning Around Market Perception
Reportedly, the board had been receiving complaints from large institutional investors going back to the end of last year. The irony is that the stock price had caught up recently, as we discussed two weeks ago, and over the past six months had comparable performance to its two major peers, as well as the major miner index. The departure also comes after Bristow triumphed at the recent Denver Gold Forum with his announcement of the growth at the Fourmile project, which he had championed. (See also Bulletin #980.)
Only a few months ago, in May, after the Financial Times reported that the board had initiated a formal CEO search process, Bristow said he would remain in the role for at least another three years, until Reko Diq in Pakistan was operational. The abrupt departure suggests that matters came to a head, and there was a dispute between the hardheaded Bristow and the board.
Of course, other than those in the room, noone knows how this abrupt departure transpired — and even there, in Queen Elizabeth's immortal words, "recollections may differ" — but it was clearly not a planned departure.
Coincidentally, on the very same day at the Barrick news (September 29), Newmont Corp. (NEM:NYSE; NGT:TSX; NEM:ASX) announced its CEO, Tom Palmer, would be retiring. In this case, however, a reason was given (he was retiring), a permanent successor was named, and a time frame was given for the transition.
Barrick appointed Mark Hill as interim president and CEO. He joined the company in 2006 and has been head of the Latam and Asia Pacific regions since 2019.
Although the abrupt departure raised questions about Barrick's third-quarter and full-year results, the company said it was performing in line with expectations, and there is no reason to think that there is anything untoward in the results.
Bristow Transformed Barrick, Despite Failures
In his tenure, Bristow had transformed Barrick, slashing burdensome debt to a net cash positive position; fixed many political disputes around the world; and established the long-overdue Nevada Gold Mines joint venture with Newmont (on favorable terms to Barrick). The charismatic and often acerbic Bristow, however, sometimes seemed to run Barrick as a one-man show.
There is no gainsaying his tremendous in-depth knowledge of every detail of the far-flung business, but he frequently did all the talking at meetings, even when questions were addressed to others who often spoke not a single word. In addition, many routine decisions were frequently stalled waiting for Bristow's final say. Going forward, there are possible outcomes.
It is possible that a replacement President and CEO is named, and life continues as before. Until the Mali imbroglio, however, Bristow had solved political disputes in countries as diverse as Tanzania, Papua New Guinea, and Pakistan, and it is unlikely another will be found with his energies and special skills in that area.
Might Newmont Try To Acquire Barrick?
There are suggestions that Newmont might try to take a run at Barrick. There is a logic to this, given the number of mines that the companies own jointly, not only in Nevada, but also the large ticket price Newmont will have to pay Barrick to maintain its interest in the Nevada Gold Mines (NGM) joint venture once Fourmile is included (see #980). Although Barrick's stock price has run, so too has Newmont's, while Barrick is trading at a lower price-to-NAV than its peers.
Newmont could take advantage of the gap at the top to make its move. Finally, Barrick could decide to break up the company, perhaps spinning out NGM, and then perhaps have a separate copper company, or perhaps separating its mines in politically high-risk jurisdictions from the rest; the simplest division would be the Americas and the rest of the world.
Given the long-term efforts to add copper and new mines to build the company, this seems perhaps unlikely, though listing some of its NGM to realize value is a possibility. There is little question, as Bristow kept hammering away, that the sum-of-the-parts is worth more than the whole. Indeed, just its share in NGM, the Pueblo Viejo mine in the Dominican Republic, and the new Fourmile project, valued at just one times NAV, is equal to the entire company market cap.
Given the gold and copper price environment, given Barrick's discount, and given the possibility of M&A that would likely benefit the company, we are holding.
Changes at the Top at Altius
Altius Minerals Corp. (ALS:TSX) also announced some changes near the top of the company, with the retirement of two senior members of management, as well as a new chairman of the board. CFO Ben Lewis, who had been with the company since 2006, and Chad Wells, VP of Corporate Development, who had been with the company for a few years prior, both retired effective immediately, but each is continuing in advisory roles and supporting the transition.
John Baker, a director of Altius since its founding and executive chairman for the past 11 years, is stepping down from the board and has been named President of the company. I know all three, Ben, Chad, and John, and all three did great jobs. Chad, in particular, did a great job with the prospect generator portfolio. Stephanie Hussey, who was VP Finance, has assumed the CFO role. Investment banker Fred Mifflin, who has been a director for 11 years, has been named the new chairman.
In addition, Brian Dalton has committed to a five-year extension of his contract as CEO, putting to rest some rumors that arose during the negotiations to sell the company's Arthur royalty (see Bulletin #973).
Altius remains a core position for us; we are holding, looking for better opportunities to add to positions.
Fortuna's Next Growth Phase Lies in West Africa
Fortuna Mining Corp. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) announced an exploration alliance with Australian company DeSoto in the "highly prospective" Siguiri Basin in Guinea. Fortuna will sole fund for at least three years on projects (designated as "Go Projects") warranting further development.
This adds to several growth initiatives in West Africa, including expansion at the Séguéla mine in Cȏte D'Ivoire, development of the Diama Sud project in Senegal, and an investment of $6 million for 15% of the shares in Awalé, an exploration company also in Cȏte D'Ivoire.
Though Fortuna remains one of our top intermediate mining companies and remains undervalued relative to peers, in the near term, it is likely overbought.
We are holding and will wait for another buying opportunity.
Agnico Trims Exploration Portfolio
Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) said it had sold its 18% interest in exploration company Royal Road (with projects in Morocco, Saudi Arabia, and Colombia) for about CA$5.5 million. Agnico has a large portfolio of minority interests in development and exploration companies — valued at over $1 billion prior to its recent sale of shares in Orla.
The company, on its recent conference call, made clear that this was not an investment portfolio, but rather that Agnico would take stakes where it was potentially interested in a project, and equally would sell once it had decided against pursuing a project or company (see Bulletin #874). This sale is in line with that. I have described Agnico as "the gold standard of miners," and, despite the run-up in the stock price, it remains a solid value with strong and growing cash flows.
In a gold bull market, this is one we want to own. Hold.
Midland Continues Exploration Successes
Midland Exploration Inc. (MD:TSX.V) announced the discovery, with SOQUEM, of a new mineralized zone of copper, gold, and rare earths in the Labrador Trough.
The alliance has worked in the large region for several years, with an emphasis on large copper projects.
This follows the discovery of gold-zinc-silver mineralization at its 100%-owned Caniapisc projects in James Bay. These, and other recent discoveries, are all very early stage, but demonstrate the prospectivity of Midland's projects across Quebec as well as Labrador and Nunavik.
Buy.
TOP BUYS this week, in addition to above, include Ares Capital Corp. (ARCC:NASDAQ), Lara Exploration Ltd. (LRA:TSX.V), and Fox River Resources Corp. (FOX:CSE).
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- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Barrick Mining Corp., Altius Minerals Corp., Fortuna Mining Corp., Agnico Eagle Mines Ltd., Midland Exploration Inc., Lara Exploration Ltd., and Fox River Resources Corp.
- Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: All. I determined which companies would be included in this article based on my research and understanding of the sector.
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