Barrick announces management shakeup as activist investor takes large stake in company.
Barrick Mining Corp. ABX-T +1.44%increase unveiled a slew of management changes late Tuesday aimed at improving its subpar performance and bulking up its operations in North America, not long after markets learned activist investor Elliott Investment Management L.P. has amassed a large stake in the struggling Canadian gold miner.
Florida-based Elliott has taken a roughly $1-billion stake in Barrick, the country’s second-largest miner, and is pressing its board to improve its share price with steps that include splitting Barrick into two companies, according to a source familiar with the campaign.
The Globe and Mail is not naming the source because they are not permitted to speak publicly on the matter.
Under the plan being pushed by Elliott, one of the post-split companies would own Barrick’s lower-risk mines in the Americas and the other would hold higher-risk properties in Africa, the Middle East and Asia.
The Financial Times first reported on Elliott’s campaign early Tuesday. Last week, Reuters also reported Barrick’s board is considering splitting up the company.
Elliott is now one of the 10 largest shareholders in Barrick, according to the source.
Analysts applauded the concept of restructuring Barrick after years of the miner’s stock price underperforming that of peers.
“It has long been our view that management focus could be better utilized focusing on assets that provide the most bang for the buck, both in terms of ounces of production, and favourable jurisdictions that provide the best multiples,” said analyst Anita Soni at CIBC Capital Marketsin a report.
After the Elliott investment was publicized on Tuesday, Barrick interim chief executive officer Mark Hill sent a memo to staff announcing a restructuring of the company’s core operating divisions. Under the new plan, the giant Pueblo Viejo mine in the Dominican Republic will be moved into Barrick’s North American unit, which already houses its Nevada operations. Pueblo Viejo was previously part of Barrick’s Latin America and Asia Pacific unit.
The move to strengthen Barrick’s North American unit is consistent with the company’s stated new strategy to focus on operations with a safer risk profile.
Earlier this month, Mr. Hill said the miner is shifting its focus to its North America operations.
Source: Theglobeandmail