"To set up the right corporate structure, you need the right management systems and modern strategies together with younger people in your business. In the merger, we transported the Randgold model to a much bigger organization and have achieved success in only 10 months, thanks to a set of young, but top-end executives who represent a standout team in the mining industry."
What was the vision behind the merger between Barrick and Randgold?
Barrick is a great company, but unfortunately fell on some hard times. When I started Randgold 24 years ago, I modeled the vision of the company on the early Barrick. The vision was focused on value, agility, quality assets, and being prepared to take risks, with great leadership at the top. Barrick developed some management issues that took the company to the edge so I started talking to John Thornton in 2015, discussing a possible merger. What attracted me to Barrick was the quality of its assets. There were three Tier 1 assets – Cortez Hills, Goldstrike, and Pueblo Viejo, and another three potential Tier 1 assets – Turquoise Ridge, which has since come to fruition, Veladero, and the Porgera JV.
Through the merger, we obtained the possibility of having six or seven of the top 10 assets in the world. If you have an asset portfolio like this you can create a standout business.
How has the structure of the company changed since the merger?
You can have the best assets in the world, but without the right people, they are useless. What had made Randgold such a success was its management structure. We did not have a head office but rather a corporate office, which is now the corporate office for Africa and the Middle East. To set up the right corporate structure, you need the right management systems and modern strategies together with younger people in your business. In the merger, we transported the Randgold model to a much bigger organization and have achieved success in only 10 months, thanks to a set of young, but top-end executives who represent a standout team in the mining industry. This team has already closed four big deals – the Barrick-Randgold merger, the Nevada consolidation, the acquisition of Acacia Mining, and more recently the sale of KCGM.
Can you elaborate on Barrick’s new strategy for the Hemlo mine in Ontario?
During our due diligence on Hemlo, we did not have a consensus on whether it was a good or bad operation, but it was clearly old fashioned, and had an average employee age of 57. We recently offered many of the employees a voluntary separation, which they have all taken. Hemlo today is a more lean, agile, modern and profitable mine. The next step will be to phase out the open pit operation and move to an underground contract mining model, with the objective to upgrade Hemlo to a Barrick Tier 2 asset and extend its Life of Mine well into the future.
Do you believe that Canada’s position as a leader in global mining has slipped in recent years, and what can be done to help revitalize the country’s mining industry?
Just like Barrick before the merger, the Canadian mining industry has fallen on hard times as it has failed to invest in young people. Mining in Canada will still exist in 10 years, but it will have to be very different to what it is today.
What is your philosophy for mining in foreign jurisdictions?
I believe that you mine a national asset. Whatever way you operate it, it belongs to the host country, and you have a duty to deliver value out of that asset otherwise you should leave it in the ground. The value of that asset should be divvied up into various segments, and most importantly back into the communities and the population of that country. We have to ask ourselves, why has mining got such a bad name? You cannot blame the markets. Poverty is a responsibility we all have to deal with. As a public company, you have an obligation to bring to account natural resource extraction across the globe regardless of where you operate.
Where does Barrick see the most opportunity for growth moving forward?
East Africa is an exciting region for the company, and we have now expanded our footprint from North Eastern DRC into Tanzania, which basically falls in the same geological province. With the launch of Twiga Minerals in Tanzania we are breaking new ground and pioneering the way we share the economics of mining with host countries in a developing world.
Canada is a standout jurisdiction for finding big mines. Although there has been a bit of a drought in Canadian exploration for a while, the opening up of big gold/copper porphyries in British Columbia is developing a new frontier. Some of the older regions in Ontario and Quebec also hold great potential. Look at how Australia has been so successful in reinventing itself through creative and penetrative exploration. Archean rocks produce surprises and I believe in Canada there are still great opportunities that lie within the ground.