TORONTO – Barrick Gold chairman John Thornton is promising a leaner company with a disciplined focus on its best assets and a decentralized operating model that gives its mine operators more control.
“When companies falter, it is usually because they’ve forgotten their original DNA — that is to say, what it is that made them distinctive and gave them their purpose and values and made them successful,” Thornton told analysts Thursday.
“We believe the only way to recapture that is to consciously go back to the future and understand who we were, what made us distinctive, what gave us our purpose and our values and reinterpret that for the 21st century.”
Barrick — which reported a US$2.85 billion fourth quarter loss after markets closed Wednesday — has struggled in recent years with weakness in the price of gold and problems developing its new mines.
The company has written down the value of its operations, including its stalled Pascua-Lama project in South America, reduced its head office staff by nearly half, and eliminated layers of management between Toronto and Barrick’s mines.
When it was announced in December 2013 that Thornton would take over as chairman of from Barrick founder Peter Munk, he suggested he would look at diversifying into other commodities.
On Thursday, however, Thornton said Barrick would be focused on gold.
“We have no plans to diversify into other metals and we have no plans to add to our existing copper position,” Thornton said.
His comments followed Barrick’s announcement of a US$2.45 per share loss in its fourth quarter, compared with a loss of US$2.83 billion or US$2.61 per share in the same 2013 period when it had fewer shares.
Revenue was US$2.51 billion, down from US$2.94 billion as the company sold fewer ounces of gold — 1.57 million versus 1.83 million — at an average realized price of US$1,204 per ounce compared with $1,272 in the 2013 fourth quarter.
The most recent quarterly loss reflected the impact of US$2.8 billion in after-tax impairment charges primarily related to the Lumwana mine in Zambia and the Cerro Casale project in Chile. The year-earlier loss included asset impairments at Pascua-Lama, a development project on the Chile-Argentina border that has been stalled by environmental issues.
The gold miner also said it plans to reduce its net debt by at least $3 billion this year and look to sell its Porgera joint venture in Papua New Guinea and Cowal mine in Australia.