In the world of mining, Barrick's name is golden. The company became the world's #1 gold producer (ahead of Newmont Mining and AngloGold Ashanti) after acquiring Placer Dome in 2006. Barrick churns out almost 8 million ounces of gold annually and has 140 million ounces in proved and probable reserves. More than a third of the company's production comes from its North American operations, which include the Goldstrike property, located in Nevada's Carlin Trend gold-producing region. Its properties outside of North America include projects in Tanzania, Peru, and Australia. The acquisition of Placer Dome brought significant copper mining operations; Barrick controls more than 6 billion pounds of copper reserves.
Barrick explores for gold deposits near its existing mines, a strategy it considers as having the lowest risk and highest potential for returns. It is also pursuing a global expansion strategy and has steadily grown beyond North America to South America, Africa, Australia, and Russia. The bulk of Barrick's gold reserves are in North America (41%) and South America (38%) with the rest mainly in Europe and Australia.
The company has been reviewing its assets and divesting what it considers noncore to its business operations and strategy. In 2012 it sold its 20% stake in Highland Gold Mining, a Russian gold producer, for about $130 million.
The company saw solid revenue growth in 2010, with sales up more than 34%. The boost came from increased production and the rising price of gold. Net income swung to a significant profit from a loss the previous year, based on the increased price of gold and higher sales volumes.
Barrick acquired the highly sought-after Equinox Minerals in 2011, beating out China Minmetals in a $7.8 billion deal. Equinox has major copper operations in Zambia and Saudi Arabia, and had been both the object of takeover bids as well as having bid for other companies, such as Canada's Lundin Mining. The deal boosts Barrick's already solid copper operations.
In 2010 Barrick spun off its African operations (African Barrick Gold) for $834 million, generating capital to invest in an expansion if its African gold exploration and mining activities.
In terms of its US operations, in 2008 Barrick spent about $800 million to buy Arizona Star Resources, the prime attraction of which was Arizona Star's Cerro Casale gold project in Chile. An additional $455 million investment in 2010 gave Barrick a 75% controlling interest in the project, which is among the world's largest undeveloped gold and copper deposits. Kinross Gold Corp. owns the remaining 25%. That same year, it spent $1.7 billion for the remaining 40% of the Cortez Hills mining property in Nevada; Kennecott had owned that stake.
Thinking creatively about the high price of oil and energy in general, Barrick bought oil producer Cadence Energy for about $350 million in 2008. The idea behind it was to be able to supply itself with a significant portion of its total oil and natural gas needs. Earlier in the year, Cadence had agreed to be bought by Daylight Resources, but Barrick was able to work things out with Daylight not long after, and the company bought assets from Daylight Resources that are adjacent to the Cadence property. Barrick installed its own leadership at Cadence after the deal was completed and created a new unit called Barrick Energy.
In 2009 Barrick eliminated its gold hedges, and allowed the gold it produces to float with the market price. Gold hedges were contracts where Barrick had sold forward gold ounces and would receive a fixed price upon delivery. Such contracts had protected Barrick from drops in the market price of gold but prevented the company from realizing its full value when prices floated up.
Chairman Peter Munk, Barrick's founder, stepped down as president and CEO in early 2009. He was replaced by Aaron Regent, who had been in charge of Falconbridge when that company was bought by Xstrata. – less
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