Barrick Gold’s Mark Bristow is on the hunt for acquisitions as rival Newmont looks to pull off a mega-deal, predicting a market rally in his company’s two key products.
The combative chief executive of the world’s second largest gold mining group expects gold and copper prices to rise, lifting mining stocks.
His comments mark a step forward in the serial trader’s M&A rhetoric after he downplayed the need to counter the $19.5 billion non-binding bid by the world’s largest gold company Newmont for Australia’s Newcrest.
He added that the group has had the “luxury of picking and choosing merger and acquisition opportunities” after improving operations following the Randgold acquisition five years ago and a four-year effort to build a strong exploration team.
“Because of our large exploration footprint in all potential tier-one gold and copper jurisdictions, we have our geologists on the front lines. We have a much better understanding of M&A activity than most of our colleagues,” he said.
Newcrest has granted industry leader Newmont an exclusivity period to conduct due diligence which ends next Thursday.
Bristow put aside concerns about the deals at a time when the price of gold, which, at more than $2,000 per troy ounce, is nearing an all-time high.
Copper assets are hotly coveted by many mining companies amid estimated demand growth due to a shift to electric cars, wind farms and transmission cables, though prices have fallen since January on a disappointing rebound in China.
Bristow said that “there is significant upside risk to the price of gold and the price of copper” due to reduced supply for both and threats to US dollar strength, as well as central bank moves to diversify your reserves by holding gold instead of the greenback for the precious metal.
Even so, Bristow has ruled out bids for Canadian miner Teck Resources’ base metals business at this stage, which could be spun off. Teck Resources was the target of a $23 billion hostile bid by London-listed Glencore.
In the markets, copper prices have fallen nearly 10% to around $8,500 a ton since January as optimism about China’s easing of anti-Covid policies faded.
However, mining executives and traders warn that historically low inventory levels increase the risk of higher prices later in the year.
In the case of gold, the sector is seen as ripe for consolidation because it is relatively fragmented and companies have fallen on hard times in the past due to investment decisions.
Barrick’s gold production fell to 952,000 ounces in the first quarter, down from 990,000 a year ago, due to scheduled maintenance at its processing plant for its string of gold mines in Nevada and l start of the commissioning of the plant in Pueblo Viejo in the Dominican Republic. That helped bring adjusted net income down by nearly half to $247 million.
Barrick is looking to grow its copper business by developing Reko Diq in Pakistan’s Balochistan province, which borders Afghanistan, while focusing on exploration in the Americas, Saudi Arabia and Egypt.
It reached an agreement in late March to reopen the Porgera mine in Papua New Guinea, where production has been suspended since 2020 after a dispute with the government.
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