Barrick Gold Faces Tough Quest in Seeking a Partner
Barrick Gold Corporation (NYSE: GOLD) is a major gold and copper producer worldwide, but its efforts to increase its copper production through acquisitions have been unsuccessful.
First Attempt: Barrick Gold’s Merger with Freeport-McMoRan
A potential merger between Barrick Gold and Freeport-McMoRan made sense due to both companies producing gold and copper, with Freeport-McMoRan being predominantly a copper producer. Barrick’s CEO, Mark Bristow, expressed a desire to grow the company’s copper segment, but the merger could not be achieved.
Second Unsuccessful Attempt: Acquisition of Canadian Miner First Quantum Minerals
Barrick Gold’s attempt to acquire the Canadian miner First Quantum Minerals, a $19 billion copper miner, was flatly rejected. The company’s weakening gold production pushed them towards a strategic shift, focusing on copper due to increasing global demand for electrification.
Barrick Gold’s Gold and Copper Production
Barrick Gold reported a first-quarter gold production of 952K Au ounces (sold 954K Oz), a multi-year low. The copper segment remains smaller compared to the gold segment.
The Reko Diq Project in Pakistan
Barrick Gold’s biggest investment project is the $7 billion Reko Diq copper-gold project in Pakistan, one of the largest undeveloped copper-gold deposits.
The feasibility study is scheduled for the end of 2024, with the first production expected in 2028. The project’s success may depend on cooperation from the Balochistan government, but the location’s challenging jurisdiction and the uncertainty of copper price projections present risks.
Barrick’s Investment in Pakistan
The investment in Pakistan may be risky due to the country’s challenging jurisdiction for mining, and Barrick Gold’s previous experiences with forced revisions in other locations. Additionally, the company’s reliance on bullish long-term copper price projections for the project raises concerns.
In conclusion, Barrick Gold’s attempts to increase its copper production through acquisitions have been unsuccessful, and its focus has shifted to the Reko Diq project in Pakistan.
However, the project’s success is uncertain, given the challenging jurisdiction and reliance on long-term copper price projections.
