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Barrick Gold to crank up focus on copper at next investor day

Come its investor day next week, expect Barrick Gold Corp. to flex its copper muscle as the price of the base metal shows increasing strength in 2018.

Barrick President Kelvin Dushnisky deferred giving details but indicated on a Feb. 15 conference call that the company would spend time talking about its copper portfolio during the investor day scheduled for Feb. 22.

It was not clear to analysts what Barrick might say. Kerry Smith of Haywood Securities said he did not know what Barrick might detail Feb. 22, noting that copper makes up a small percent of the miner's cash flow.

"So I assume they would sell at the right price," Smith said.

Dushnisky said Barrick considers its copper assets noncore but recognizes their "high value." The assets include the Lumwana copper mine in Zambia, which produced 256 million pounds of copper in 2017.

A Barrick spokesperson had not responded as of press time to a request for more information about what Barrick might outline regarding its copper strategy.

In part, the company may be seeking to highlight its strengths to investors after a year or so of poor share price performance relative to some majors. As noted in a recent Bloomberg News article, Barrick's share price has sunk in recent months while Newmont Mining Corp.'s has risen.

Smith chalked up the share price slump to gold output and said the "underperformance is probably more to do with the declining production profile going forward."

Overall, Smith said he liked what he saw in Barrick's financial results for the fourth quarter of 2017 and the full year.

Good year with bumps

On the fourth-quarter call, Dushnisky acknowledged challenges during 2017, pointing to Veladero in Argentina, where there were spills, and Tanzania, where Acacia Mining plc is embroiled in a dispute with the government. But overall, he said he was pleased with Barrick's performance, highlighting its decreasing debt among other things.

Acacia remains a problem for Barrick as its majority shareholder with a 63.9% stake. Barrick outlined a tentative agreement with the Tanzanian government in October 2017 to resolve issues including a ban on concentrate exports and taxes Tanzania says are owed by Acacia.

Dushnisky said the hope is to reach a settlement on Acacia by mid-year. Any deal will have to be reviewed by an independent committee before going to Acacia's board for a recommendation, COO Richard Williams said during the call. An approved deal would go to shareholders for a vote.

If Barrick agrees to the deal, it plans to take part in the vote with its majority shareholding. "Barrick intends to exercise its shareholder rights," Williams said.