Barrick Mining Corp. ABX-T is considering an initial public offering of a minority interest in its North American mines, bowing to pressure from shareholders to take action after years of sluggish stock market performance.
Shares in Barrick have long traded at a discount to peers such as Agnico Eagle Mines Ltd. AEM-T because of its heavy exposure to risky jurisdictions in Africa, the Middle East and Papua New Guinea, as well as its exposure to copper assets in Zambia, Saudi Arabia and Pakistan.
Toronto-based Barrick was founded in 1983 by Hungarian immigrant Peter Munk who eventually built it into the world’s biggest gold mining company. But over the last decade, it has slipped down the global mining charts, losing its crown to Colorado-based Newmont Corp. in 2019, and then getting passed by Canada’s Agnico in 2024.
Interim chief executive officer Mark Hill said in a press release on Monday that an IPO of Barrick’s North American assets offers “more optionality around jurisdiction in a pure gold company.”
Barrick is working with American investment banks M. Klein & Company and Goldman Sachs as it studies the spinout, a source familiar with the situation told The Globe and Mail. If the board goes ahead with it, executing on the transaction could take up to 12 months, the source added.
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The Globe is not identifying the source because the person wasn’t authorized to speak publicly.
In recent years, geopolitical spats in jurisdictions outside North America, such as Tanzania, Papua New Guinea and Mali, have spooked investors and weighed on Barrick’s valuation.
Investors in Barrick’s North American unit would gain exposure to its giant gold mines in Nevada, its huge Pueblo Viejo operation in the Dominican Republic, and Fourmile, a promising Nevada discovery – all locations that are considered politically safe and reliable for investors.
The partial spinout plan falls short of a full split of Barrick that some investors had pushed for, and the reaction from investors was lukewarm on Monday, with the stock closing up by only 1.4 per cent on the Toronto Stock Exchange.
U.S. activist investor Elliott Investment Management LP recently amassed a $1-billion stake in Barrick and had been pushing for a clean split of the company, fully separating its North American mines from the other riskier part of its business.
Pierre Lassonde, chairman emeritus of Franco-Nevada Corp., said in an interview that spinning out only a minority stake in Barrick is a “a dumb idea.” In fact, it could make its problems worse, by creating an “orphan” that will likely trade at a discount owing to Barrick retaining the majority share, isn’t likely to be big enough to make the major stock indexes, and will probably suffer from poor liquidity.
“You want a complete breakup, not just 10 to 20 per cent,” Mr. Lassonde said. “The rump will trade at a discount.”
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However, even a partial spinout of the North American assets could position Barrick for an eventual merger with Newmont Corp., effectively creating a stalking horse bid, said Mr. Lassonde.
Barrick and Newmont are already joint venture partners in Nevada Gold Mines, the biggest gold mining operation in the world.
“You’re essentially putting it out there and saying ‘Guys, it’s dinner time. Bring your pitchforks and your knives. We’re ready to be cooked,’” Mr. Lassonde said.
Canada’s second-biggest gold miner has been in particular flux over the past few months. In late September, the company abruptly parted ways with Mark Bristow, who had been CEO for almost seven years. The Globe reported that Mr. Bristow left after clashing with chairman John Thornton.
Meanwhile, Barrick’s lead independent director, Ben van Beurden, stepped down last week after only being in the role for a few months. No explanation was given for his departure. The Globe reported that Mr. van Beurden left Barrick after plans for him to succeed Mr. Thornton fell through.
By not proceeding with a possible IPO of the North American division until next year, Mr. Thornton all but guarantees he will stay in his role for the foreseeable future.
A former investment banker with Goldman Sachs, Mr. Thornton was originally recruited by Barrick’s founder Mr. Munk in 2012. He has since outlasted several CEOs and presidents, including Jamie Sokalsky, Kelvin Dushnisky, Jim Gowans and Mr. Bristow.
“Thornton loves his job,” Mr. Lassonde said. “He’s going to do everything he can to stick around as long as he can.”
The potential unwinding of North America from the rest of Barrick would effectively unravel the acquisition of Africa-centric Randgold Resources Ltd. in 2019. That deal was put together by Mr. Thornton and Mr. Bristow. The Randgold acquisition brought mines in the Democratic Republic of the Congo and Mali into the Barrick portfolio.
The Malian operations in particular have been a troublesome asset. Barrick was forced to shut them down in January, after falling out with the country’s military leadership over a new mining pact. Last week, Barrick reached an agreement with the West African regime to end the spat.
But Barrick also struggled in Nevada, where it forged a joint venture with Newmont in 2019. Barrick is the operator of the Nevada mines but, production has been lower than expected, costs have been higher than predicted, and the safety record has been poor.
A standalone North American Barrick unit could also attract the attention of competitors other than Newmont, such as Toronto-based Agnico. The Canadian miner over the past decade has been a savvy strategic acquirer in the industry, snapping up Kirkland Lake Gold Ltd. KL-N in 2022, and Yamana Gold Inc.’s AUY-N Canadian operations a year later.