What did Barrick’s Q3 2021 results show you about progress made since the Randgold merger?
After the Barrick/Randgold merger, Nevada Gold Mines (NGM) was established, we took Acacia private, and sold Sabodala to Teranga (before the Endeavour merger). From the initial discussions with John Thornton in 2015 we had a strategic plan based upon flattening the structure and focusing on the Randgold model whereby the operations own the orebodies, have a responsibility to unlock their value, and importantly, are able to respond quickly to changes.
Barrick’s Q3 results show that we have been able to deliver on our strategy of focusing on the best assets, fixing the balance sheet and ensuring our social license to operate, even though the environment changed around us. If we have a challenging next seven years, like we had from 1992 to 1999, Barrick will still do well because we are fundamentally profitable. We run our business on US$1,200/oz Au and have a significant amount of net cash. This makes us independent of the market, and means the responsibility of creating value sits with management.
Another key aspect highlighted in Q3 was Barrick’s focus on exploration. We replaced more than 70% of the gold we have mined in the last two years, and in 2021 we will replace all the gold we mined. Our pipeline, whether it is the work we are doing in the Veladero Pascua-Lama region, advancing Donlin Gold in Alaska, or the various frontiers that we have opened such as Egypt, Japan and Guyana, means the company’s future is in good shape.
You have been outspoken about Barrick’s intention to increase its portfolio in Canada. What type of asset are you looking for?
We look to consolidate significant land packages that we can put geological models to, and then commit to investing in exploration. I have no doubt that Canada has the potential to still deliver significant discoveries.
The criticism I have of the current breed of fund managers is that they keeping forcing the gold industry into short-term trading. They do not work with the industry to consolidate good assets under quality management. You have too many managers managing too few assets. Assets are rarely high quality when they get discovered or announced, and are forced into deals at inappropriate times, after the heart of the deposit has been mined out. As a result, mines get taken out at the top of the market because of necessity, at a higher price than they’re worth. We were keen on a number of assets, but saw them become too expensive so their value eroded. Considering this context, we decided that if we cannot find mines to buy that fit our criteria, let’s build mines ourselves.
What is the status of the transition to underground mining at Hemlo?
Hemlo has very high grades and is a mine that made money in spite of what people did with it. It was one of our assets that needed the most fixing, and one that was impacted the most be Covid. We decided to close the pit and bring in Australian contractors to retrain the workforce, but lockdowns in Canada and Australia have delayed this process. However, we have not stopped drilling to increase reserves and resources.
On the topic of ESG, what benefits have you seen when empowering local workforces?
I grew up in South Africa under apartheid, and know that you cannot put a value on the liberation of people. People speak about the “E” component until they are blue in the face, but I call the S in ESG “the silent S” because no one talks about it. When you build a mine you do not really own it, you are renting a national asset – the natural resource endowment of a country. If you cannot create value out of it, then you shouldn’t develop it, because that’s theft. If you can create value, that value should be part of a pie that is shared with local communities and the people of the host country. As a public company, your responsibility to the silent S is enormous.