The moves come just weeks after the abrupt exit in September from former CEO Mark Bristow, and as Barrick’s new CEO, Mark Hill, begins to overhaul the company’s regional structure.
In an internal memo seen by BloombergHill said Barrick will merge its Pueblo Viejo mine in the Dominican Republic with its North American division and merge its operations in Latin America and Asia Pacific to improve performance.
Elliott’s investment also comes at a challenging time for Barrick.
The company has been hit by rising costs for key North American assets and the loss of its most profitable operation, the Loulo-Gounkoto mine in Mali, after the military junta took control earlier this year.
The dispute, which related to Mali’s new mining tax law, resulted in the seizure of 3 tons of gold by the state and the arrest of four Barrick employees. The loss of assets also caused a write-down of approximately $1 billion.
The setbacks have left Barrick lagging behind its peers, despite a strong rally in the gold price. Company shares have risen 117 percent in the past year, compared with an average gain of 130 percent among major rivals.
Barrick’s performance has business leaders weighing their options.
As mentioned, a split into two companies is being considered. Four people told Reuters that this could involve a company focused on North America and another company that owns assets in Africa and Asia. Another option is the entire sale of Barrick’s African portfolio, together with the Reko Diq project in Pakistan, once financing is secured.
Barrick is also trying to resolve its dispute with Mali before proceeding with the sale of that operation.
Investors have previously floated similar ideas but were suppressed due to the company’s North American footprint.
The company’s main US assets are the Nevada Gold Mines, which it operates in partnership with Newmont (NYSE:NEM,ASX:NEM), and the feeling is that “there’s not much value” in Barrick’s remaining mines.
Bloomberg reported last month that Newmont was exploring whether a transaction could give it control over the Nevada operations it shares with Barrick, but discussions have not moved forward since.
Elliott, meanwhile, has a long track record of targeting miners including Anglo American (LSE:AAL,OTCQX:AAUKF) and Kinross Gold (TSX:K,NYSE:KGC), often pushing for structural changes.
For Barrick, the challenge now is to stabilize its business while deciding how far to go with strategic restructuring in today’s historically high gold price.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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