“We are always engaged in exploration and we are always talking to the junior explorers,” said Bristow.
The Africa-linked Randgold Resources that Bristow ran before merging it with Barrick four years ago had a highly successful discover and develop strategy that resulted in a discovered cost per ounce being considerably lower than the ounces other gold companies were acquiring through mergers and acquisitions (M&A).
When M&A opportunities manifested themselves, they were grasped well beyond the operational assets into major additional asset building through brownfield operation around the assets acquired. The surrounding exploration potential was invariably assessed in cases where assets were acquired and measured against a proven discovery and development yardstick.
Questioned by Indaba chairperson Bernard Swanepoel on the number of people that make up Barrick’s exploration endeavours, as well as the company’s investment in exploration, Bristow responded that the New York- and Toronto-listed company employs about 400 exploration geologists and spends about $150-million a year on greenfield exploration.
“That excludes mineral resource management and reserve extensions of our current operations,” Bristow added during question time at the event.
On whether the company’s copper strategy would force M&A beyond exploration, Bristow said: “Let’s step back a bit. We started with a great quality portfolio of gold deposits when we merged Barrick and Randgold. Randgold had had some very key tier 1 assets and people mess with the definition of tier 1 now.
“Tier 1 is very clear – 500 000 oz of potential gold production for more than ten years at the lower half of the cost curve, and we’ve got six of those and a couple in the making.
“Barrick also came with some copper assets, some in Saudi Arabia, for which we’ve now increased production by 50% and lowered cost, and the big Lumwana mine in Zambia, which we now have a destination for, and we believe that we’ll be able to add another 40 years to its life, nearly double its production and it’s definitely got the potential to get to five-million tonnes of contained copper.
“Then we’ve got the Reko Diq project in Pakistan, which is, in every sense, a tier 1 copper asset, and we’ll grow our gold equivalent production through expansion of our gold operations and the growth in our copper organically by 25% by 2029.
“So, I think sometimes the market is more hung up about growth through M&A than I am. At the same time, it’s our business to always look for opportunities and to attempt to exploit them when they manifest themselves.
“We’ll continue to do that because everyone that works in Barrick loves gold and copper mining, we follow the market, we understand what’s going on. At the same time, we are very mindful, as the Randgold share price performance showed, where we separated from the market and the gold price as a share price was when everyone else was running around doing M&A from 2011 to 2014, and then it all ended up in tears.
“We end up in tears time and again in our industry, in that we forget what happened last time and so we do it again, just to remind ourselves. The one thing we have is memory, and we reflect on it, as we did back in those early Randgold days. The most important thing is that in Barrick, the senior executive team are owners. They act like owners, so who would want to go and risk the whole value base of a company through reckless M&A?”.
Then, following the acquisition of a small mine in Mali, Randgold was listed on the London Stock Exchange two years later, which was no easy matter at a time as the gold price had fallen through the floor.
But Randgold succeeded in outperforming the gold price, driven by its strong belief that true value is created through discovery and development, hence its focus on exploration, which carried over into its merger with Barrick in 2019.
Randgold had to look beyond Africa for growth and Barrick needed Randgold’s management and business model to fix its problems. The stated motivation for the merger was that the best assets managed by the best people would deliver the best returns.
The vision was to build the world’s most valued gold and copper company and brownfield and greenfield exploration has expanded the group’s asset base through new discoveries and post-acquisition additions.
As was the case with Randgold, Barrick is now a standout replacer of reserves and resources depleted by mining year after year, and this at a time when the mining industry reserves are generally running down.
“There is no doubt in my mind that mining is essential to a cleaner and more sustainable world and Africa has the resources to benefit from this critical industry,” Bristow told the London Indaba, covered by Mining Weekly.
The merger has enabled Barrick to increase its investment in Africa and to demonstrate the continent’s investability to the rest of the world and the developed countries’ governments and the global mining industry.
The North Mara and Bulyanhulu gold mines in Tanzania, which were derelict when Barrick took over control three years ago, are showing good potential.
The Lumwana copper mine in Zambia is being advanced into a long-life operation through the development of a super pit.
The Randgold-Barrick merger enabled ESG to be taken to the next level, ensuring the embedding of environmental, social, and local economic considerations in all business decisions. Biodiversity is promoted through community upliftment and through the development of emission targets grounded in the realities of climate science.
The merger has proved that the Africa-centred Randgold model works on a global scale.
“We are now applying the experience we gained over 40 years as an investor in and partner to the African mining industry.
“As we build our business in other emerging regions, mining is the key to the delivery of a better world – no doubt – and to achieve that, we need many other mining companies and investors to follow our lead into parts of the world where previously they have feared to tread,” said Bristow.