Randgold CEO Says New Barrick to Focus on Cash-Generating Assets

(Bloomberg) -- Randgold Resources Ltd. Chief Executive Officer Mark Bristow said the company formed by its merger with Barrick Gold Corp. will focus on high-quality assets to generate cash to boost dividends and shareholder value.

The merger between Barrick and Randgold will also provide momentum for further consolidation within the gold industry, which needs to better compete for global investors, Bristow said in an interview after the release of his company’s third-quarter results.

Key Insights

  • It’s clear that Bristow, who will become CEO of new Barrick, will employ the same game plan that made Randgold the darling of gold-mining investors. That means focusing on the five tier-1 assets the enlarged company will have in its portfolio and sweating them for cash.
  • Bristow, who’s long been critical of Barrick’s approach in Tanzania, says the company’s Acacia assets have “real potential.” The CEO says Randgold is used to managing assets in challenging areas and ultimately one of the key tests of the merger will be whether Bristow can broker a successful deal with the government.
  • The CEO sees further gold mining industry consolidation as there aren’t enough assets to go around. New Barrick will be part of that process, selling off lower-quality assets and cutting leverage. That may include its Hemlo assets in Canada.
  • Following the Randgold model, operational excellence will be another priority at new Barrick, whether in Nevada, Canada or Tanzania. As Bristow puts it, anyone working for the company will “have to be able to walk and chew gum at the same time.”

Market Reaction:

Randgold shares climbed 0.6 percent to 6,376 pence as of 8:48 a.m. in London. The stock is down 14 percent this year.

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  • Third-quarter results

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