Barrick shifting into growth gear says CEO Mark Bristow

Since the merger of Barrick Gold (TSX: ABX; NYSE: GOLD) and Randgold Resources early in 2019, the new gold major appears to be completing a full circle under the leadership of Mark Bristow by increasingly prioritizing value-adding grass-roots exploration and development, he tells The Northern Miner.

After kicking off a period of top-tier gold-industry consolidation, the company has been focusing on “right-sizing” the portfolio, focusing only on Tier 1 and Tier 2 assets. But getting back to value creation through the drill bit is something close to the former Randgold Resources executive’s heart and an activity he is increasingly able to accomplish as most of Barrick’s operating assets are currently performing well.

Bristow has been very vocal about his commitment for Barrick to remain a Canadian company and has been talking about the company’s commitment to secure a new top-tier asset in the mining-friendly jurisdiction since the Denver Gold Forum in September.

“We remain Canada’s biggest gold mining company, and Hemlo remains our only strategic operation here,” says Bristow in an interview. “I’ve been very outspoken about my commitment to grow our portfolio in Canada. We’re very committed to doing that, but as you know, we are very focused on Tier 1 assets.

“Since I coined the phrase ‘Tier 1’, the definition varies quite a lot. A Tier 1 asset is an asset that can produce 500,000 ounces gold a year, for more than ten years, at the lower half of the cost curve.”

Bristow says implementing the Tier 1 strategy in Canada is a challenging task. “In Canada, of course, we have a Tier 2 asset, Hemlo in Ontario, which we would also invest in despite the lack of that 500 ounce per annum marketable inventory. Still, it gives about 200,000 to 250,000 ounces, for more than ten years, at the lower half of the cost curve,” he says.

According to Bristow, Canadian gold deposits tend to be relatively small and always “quite complex.”

Hemlo is a Tier 2 asset and the smallest producer in the portfolio. Bristow describes it as a challenging mining enterprise. “When we did the Randgold merger, we looked at it because it had already been struggling and again, you know, what gave it a lease of life was the open-pit mine, which came to an end in 2020.

“During 2019 and 2020, we reviewed the mine, and we recognized we had to go underground. We set out to re-cut the underground mining plan, bring in more modern mining long-hole stoping, and try and bulk up the mining sections because it was always mined under a very old-fashioned mining style.

“We’ve got some work to do in Hemlo, to continue to re-establish a new mining practice. The positive is that we have continued with our exploration efforts during this time. So we have identified more resources and significantly more potential along the extensions, both east and west of the mining complex, in areas surrounding the mined-out area.

“We’ve got to get through the next 18 months to two years, manage the transition to a new mining philosophy, the sort of plan that we were expecting to implement in 2020 already but couldn’t because of Covid,” says Bristow.”

I’ve always built value for our stakeholders through discovery and development. So, Canada still offers some exciting prospectivity because it is very miner friendly. And what we bring into Canada is a very clear commitment to explore,” says Bristow.

“At the same time, we’ve been very interested and focused on some of the single asset and multi-asset mergers and acquisitions opportunities in Canada. But again, finding value and those types of opportunities at this upper end of the gold market is always difficult. So, we are participating in those discussions as they come along. And if we find something, we will engage, as we’ve done in the past. We’re not scared of having a crack at getting an opportunity that will deliver value,” says Bristow.

Bristow says he is steering Barrick back to its exploration and development roots. In Barrick’s ‘teenage years,’ it was a very successful explorer that made some very notable discoveries in Canada and elsewhere. “Right now, we’ve really just disposed of all our non-core assets. We’re moving into a period of tapping increased value from our existing portfolio,” he says..

For example, Barrick uses the 50-50 Veladero joint venture with Shandong Gold in Argentina as a “more strategic bulkhead into that part of South America.”

According to Bristow, Veladero alone does not necessarily fit all the criteria of a Tier 1 asset, but it’s in what management sees as a good address in a part of the world that produces vast deposits, both gold and gold-copper.

And it is here at the neighbouring multi-billion-dollar Pascua-Lama copper-gold project straddling the Argentina-Chile border that Barrick had run into development roadblocks. The closure of the Chilean side of the Pascua Lama project related to the exploitation permit. “There were no ways that Barrick was going to continue with the permitted plan,” says Bristow.

“From my viewpoint, the project had many challenges. When I arrived in 2019, my focus was on finding a constructive solution with the host country, as I’ve done in Papua New Guinea and the Porgera project, and in Tanzania with the Twiga Joint Venture with the Tanzania government.

“This was a project that definitely was mispositioned or misaligned in its development strategy. And so, we agreed with the authorities to put that permit to bed. But at the same time, we’d continue to evaluate it because I believe that we need to know and be able to share with our shareholders the value of this asset. At the same time, we owe it to the Chilean authorities to share with them what we think the value of that asset is,” says Bristow.

To date, Barrick had invested billions of dollars in establishing infrastructure and a processing facility, which is nearly complete, on the Argentinian side of the Pascua-Lama project. However, it had never finished evaluating all the prospective targets on the Argentinian side either, because the intention was to start production on the Chilean side.

Bristow says the company is increasingly looking at extracting more synergies between neighbouring Veladero and Pascua. “My view is, let’s look at the whole package. And we know that if you put the infrastructure at Veladero with Pascua-Lama and that significant investment, you have a gold processing facility that can process just about any type of gold and copper ore.

“And so, we’ve set ourselves a deadline of 2024 to complete the total evaluation of the prospective resource inventory, both within the Veladero Joint Venture and then the Lama project as well as the Pascua project.

“When we’ve done that, we’ll be able to decide, can we create one big complex, put it all together Pascua-Lama and Veladero, or maybe just an Argentinian focused opportunity,” says Bristow.

However, drilling efforts at Pascua continue on the Chilean side too. Despite some project detractors expressing opposition, Bristow said the Chilean courts recently sided with Barrick and allowed it to undertake more resource confirmation drilling on the Chilean side.

“I built my whole career on the ‘licence to operate’ concept because, in sub-Saharan Africa, your license to operate is more valuable and meaningful than even the legal licenses in that region. When you look at what we’ve been able to achieve in the last two and a half years, we’ve put a lot of effort and energy into building that social licence, recognizing our various stakeholders who are as important as our shareholders. And we built a strong partnership with the Argentinian authorities,” says Bristow.

“As you’ve seen, I’ve walked back a situation in Papua New Guinea where we’ve re-established strong relationships with the current government. And we’ve also re-established Barrick’s footprint in Tanzania very effectively. I’ve been focused on re-positioning Barrick as a go-to global gold-copper company,” says Bristow.

Another challenge currently enjoying Bristow’s full attention is permitting a new tailings management facility for the Pueblo Viejo mine in the Dominican Republic, a joint venture between Barrick (60%) and Newmont (NYSE: NEM) (40%).

If the permit does not come through soon, Barrick would be forced to stop mining this year and deal with a declining production profile from the asset through 2027. However, Bristow is pushing through with a pre-emptive expansion of the mill as it works with the government in good faith that the operation will be allowed to continue.

Barrick recently provided a global guidance update, saying it remained on track to achieve full-year 2021 production guidance of 4.4 to 4.7 million oz. gold, with all regions, except for North America, trending at the higher end of their regional guidance. Barrick singled out Hemlo and Turquoise Ridge mine in Nevada as potentially being on track to miss guidance.

Bristow says the Turquoise Ridge operation had some challenges this year, including a mill ring failure on one of the significant modules of the Goldstrike roaster. “We’ve had to stop and slow down the throughput and repair it, which we’ve done now – it’s back on track. However, we were able to effectively manage that by stockpiling high-grade ore and processing some of the more challenging ore because we had a slower throughput, so we could have more residence time in the roaster. Now we’ve got them all up and running, we can process, and we’ll recoup that gold from Turquoise Ridge.”

Bristow says Turquoise Ridge is one asset that epitomizes the Tier 1 philosophy the company is looking for. “It’s a huge asset, but it’s also been somewhat of a lazy asset in the hands of Barrick because previously, it used the Newmont processing facilities. And of course, Newmont always preferred its feed to the Barrick feed in the partnership.

“However, once we did the deal and merged the Barrick and Newmont assets, of course, we took that fence away. We’ve exposed the bottlenecks in the Turquoise Ridge underground mine, which is a very low-cost producer, and it’s got a significant upside potential,” says Bristow.

Development of a third shaft closer to the orebody is underway. “But that only gets commissioned next year, and at the same time, we’ve been running trials with big electric trucks underground and ironing out the snarls.

“These pioneering projects provide us with some challenging situations but are necessary as we work alongside our technology partner Sandvik,” says Bristow.