Gold miner Barrick plays down talk seeking copper asset, doesn't rule it out

New York — Mining major Barrick is laser-focused on the gold business and played down recent reports that it is on the hunt for copper reserves, although could be interested if they came alongside a tier one gold asset, CEO Mark Bristow told S&P Global Platts this week.

Bristow played down recent headlines, but he didn't rule out acquiring copper "if it comes with gold. We are a very focused tier-one gold miner". Bristow said he believed that copper is a "very important strategic metal" and was essential for the transition to a greener future.

"If you believe in ESG requirements to reduce global pollution, then the current copper price is wrong [too low]," he said.

Barrick, like other gold miners, has been enjoying a solid run with the gold price being boosted by the coronavirus pandemic.

"Principally we are a gold business, with a focus on owning the best assets. I would not want to detract from that," he said. However, Bristow did not rule out strategic copper investments that met Barrick's investment criteria and offered real value for the company, and all its stakeholders.

Gold miners have historically missed the boat when the gold price has rallied, but over the course of 2019 miners outperformed the gold price.

Bristow puts this down to the industry's chronic short-termism which made it incapable of creating real value for investors.

He was cautious about the direction of the gold price and said that from his perspective, the price was already giving very healthy margins. A steady gold price -- anywhere above $1,200/oz -- was better for the miners than a volatile one that is being traded for constantly new highs by the market.

Barrick has an all-in sustaining cost of around $950/oz, which it aims to reduce to $850 over the next five years. Gold was spot bid at 1315 GMT around $1,735/oz.

He also said that the massive stimulus from governments was worrying, and was supporting a high gold price at a time production was going down.

"We are headed for an unprecedented recession," he added. Risk off is generally good for gold, as investors seek safe-havens.

STRONG BALANCE SHEET

He also said Barrick had the "strongest balance sheet in the mining industry."

With the gold sector's first-quarter earnings coming to a close, analysts flagged the sector's growing free cash flow in contrast to past boom times as producers reap the benefits of higher gold prices and cost controls, according to a report from S&P Global Market Intelligence published Friday.

"A decade ago, after the great financial crisis, the gold price was touching all-time highs and gold companies, by and large, were chasing a growth-at-all-costs strategy," said TD Securities analyst Greg Barnes in a May 7 note. "Costs were ballooning, capital expenditures were inflating, and M&A was prevalent. But lost in all of the noise was cost discipline and a focus on shareholder returns."

However, the landscape has since changed, with gold miners re-focused in recent years on lowering operating costs and shedding debt, Barnes and other analysts said.