Barrick Gold boss hunts for takeover targets

Barrick Gold’s Mark Bristow is on the hunt for takeovers as rival Newmont tries to push through a mega-deal, forecasting a market rally in his company’s two key commodities.

The pugnacious chief executive of the world’s second-largest gold mining group expects gold and copper prices to rise, lifting mining stocks.

His comments mark a step up in the serial dealmaker’s M&A rhetoric after playing down the need to counter the world’s largest gold company Newmont’s $19.5bn all-share non-binding bid for Australia’s Newcrest.

He added that the group had the “luxury of picking and choosing M&A opportunities” after improving operations following its takeover of Randgold five years ago and a four-year effort to build a strong exploration team.

“Because of our broad footprint of exploration across all prospective tier-one gold and copper jurisdictions, we have our geologists on the front lines. We have a much better understanding of the M&A activity than most of our peers,” he said.

Newcrest granted Newmont, the industry leader, an exclusivity period to conduct due diligence that ends next Thursday.

Bristow brushed aside concerns about dealmaking at a time when the price of gold, which, at more than $2,000 per troy ounce, is approaching an all-time high.

Copper assets are fiercely desired by many mining companies because of the estimated demand growth due to the switch to electric cars, wind farms and for transmission cables, although prices have fallen since January on a disappointing rebound in China.

Bristow said “there’s significant upside risk for the gold price and the copper price” because of tightening supply for both and threats to US dollar strength as well as the shift by central banks to diversify their reserves by holding gold in place of the greenback for the precious metal.

Even so, Bristow has ruled out at this stage bidding for the base metals business of Canadian miner Teck Resources, which could be spun out. Teck Resources was the target of a hostile $23bn bid from London-listed Glencore.

In the markets, copper prices have fallen almost 10 per cent to about $8,500 per tonne since January after the fading of optimism over China’s easing of its zero-Covid policies.

However, mining executives and traders warn that historically low levels of inventory raise the risk of prices spiking later in the year.

In the case of gold, the sector is considered ripe for consolidation because it is relatively fragmented and companies have fallen out of favour in the past over investment decisions.

Barrick’s gold production dipped to 952,000 ounces in the first quarter, down from 990,000 a year ago, due to planned maintenance at its processing plant for its set of gold mines in Nevada and the start of plant commissioning at Pueblo Viejo in the Dominican Republic. That contributed to pushing adjusted net earnings down by almost half to $247mn.

Barrick is seeking to grow its copper business by developing Reko Diq in Pakistan’s Balochistan province, which borders Afghanistan, while focusing on exploration in the Americas, Saudi Arabia and Egypt.

It reached an agreement in late March to reopen the Porgera mine in Papua New Guinea, where production has been suspended since 2020 after a dispute with the government.