John Thornton has regularly made US$3-million annually as executive chair of Barrick Gold.Chris Helgren/Reuters
Two months in, the narrative is shaping up quite nicely for John Thornton.
Barrick Mining Corp.’s ABX-T board chair won a power battle in September and ousted former chief executive officer Mark Bristow. And since then a tidy picture has been painted: Mr. Bristow simply had to go because he was a brash leader who wouldn’t listen, an executive who was scared of acquisitions and a reckless man who couldn’t play nice with foreign governments.
All of that is true, to varying degrees. But this convenient narrative is also missing a crucial element. Through it all, Mr. Thornton stood side-by-side with Mr. Bristow – not just as board chair but also, until 2024, as executive chair, a position with more involvement in day-to-day operations. He had considerable control over the kingdom, and he was paid handsomely for his guidance.
In recent years, Mr. Thornton regularly made US$3-million annually as executive chair, 10 times more than the other directors. And before the Barrick merger with Randgold Resources in 2018, which would see Mr. Bristow, the latter’s CEO, step into the same role in the newly formed company, Mr. Thornton earned US$10-million a year on average.
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Mr. Thornton’s fingerprints have also been on Barrick for much longer than Mr. Bristow’s. He joined Barrick as co-chairman in 2012 at the behest of founder Peter Munk, who hailed him as some sort of visionary – a former Goldman Sachs banker who was part of the global elite and who had strong ties to China’s Communist Party leaders. It’s why Mr. Thornton was paid an $11.9-million signing bonus just to come on board.
And yet, all Barrick has done under Mr. Thornton is underperform its gold mining peers. Until May, its shares were still down 50 per cent from their record high set during the commodity supercycle in 2011, despite gold doubling in price over that time, and Barrick traded at a deep discount to its net asset value – 0.65 times its NAV, compared with the industry average of one times NAV.
And while Barrick’s shares have been on a tear for the past three months, their recovery largely stems from exploration the miner has been doing in Nevada at its Fourmile project, unearthing what looks like a new world-class gold deposit. It’s the type of work Mr. Bristow had been championing over expensive M&A.
To be clear, Mr. Thornton was handed a horrible deck. When Mr. Munk hired him in 2012, Barrick was suffering from the founder’s hubris. The company spent US$8.5-billion developing Pascua Lama, an impossible project high in the Andes Mountains that was ultimately abandoned, and paid $7.3-billion in cash for a copper miner in Zambia.
It was all a debt-fuelled disaster made worse by a tumbling gold price that was cut nearly in half between 2011 and 2016. Barrick wrote down US$20.7-billion worth of assets in two years.
To resurrect Barrick, Mr. Thornton and the two co-presidents he installed – he got rid of the CEO position – slashed debt and made free cash flow a priority, rather than hunting for more assets. But the whole mining industry was in a slump and investors just wouldn’t come back.
With the stock going nowhere, Mr. Thornton went for a Hail Mary in 2018. He’d gotten to know Mr. Bristow, then the CEO of Africa-focused Randgold Resources through a mutual friend, and they’d spent some time at each other’s places in Palm Beach, Fla. and Jackson Hole, Wyo. Mr. Thornton liked that Mr. Bristow ran each of his mines like individual businesses, with local leadership and accountability, and so he pitched an acquisition.
However, Barrick didn’t want to pay a premium for Randgold, so Mr. Thornton made a pitch: He’d buy Randgold for no premium, and install Mr. Bristow as the new CEO – allowing Mr. Bristow to jump from a mid-sized gold company in Africa to the largest gold miner on earth.
The marriage worked at first, and Mr. Bristow earned respect for getting longtime arch rival Newmont Corp. to sign a joint venture on their mines in Nevada, with a goal of cutting costs between them.
But even that couldn’t move the needle for Barricks’ shares, and then everything fell apart in the last three years.
Mr. Bristow was averse to M&A, because so many miners had overpaid in years past, preventing Barrick from adding reserves when things were cheap a few years back. The miner also took a US$1.6-billion writedown in early 2023, largely stemming from its Loulo-Gounkoto project in Mali, suggesting nothing much had changed at the miner.
Barrick also suffered from a double whammy of rising costs and falling production. In 2019, the miner produced 5.3-million ounces of gold. Last year, it produced 3.9-million. At the same time, its costs have also soared.
From afar, it can all seem like Mr. Bristow’s doing. The Loulo-Gounkoto project was a Randgold mine, and his strategy of running each mine like an independent business was clearly backfiring because costs were soaring.
However, a wider lens is needed. Here’s another way of looking at it: The Mali project came from Mr. Thornton’s acquisition of Randgold, a deal that added geopolitical risk. And for all the hype about him being both a visionary and an executor – “Often you have one or the other. He does both,” Dominic Barton, former global managing director of McKinsey & Company told The Globe and Mail in 2015 – he just hasn’t delivered.
There’s certainly more to it. Mr. Bristow is known for his ego, and multiple reports have shown that communication broke down between the two men.
But two simple facts remain. The price of gold has been on a tear. Barrick should be minting money, and it isn’t.
And if Mr. Bristow really was the problem, it was Mr. Thornton’s job to manage him. That’s the entire purpose of a board of directors. If he couldn’t do that, why has he been paid so much money?