TORONTO: John Thornton appeared ready last year to step down as chairman of Barrick Mining Corp, after a turbulent 12-year tenure.
Instead, he seized control from his long-time chief executive officer and is now driving a reinvention of one of the world’s largest gold producers.
His plan is running into trouble, though.
The former Goldman Sachs banker’s idea to separate the Canadian company’s North American mines in an initial public offering (IPO) is facing backlash from some of Barrick’s top investors, who don’t want to share their interest in the company’s most valuable assets.
Portfolio managers at Van Eck Associates Corp and Mackenzie Financial Corp have contacted Barrick within recent months to express opposition to the chairman’s strategy. Franklin Equity Group is also opposed.
Frustration is so high that at least one investor is calling publicly for Thornton’s resignation.
“If you ask me, it would be nice to have a graceful exit of this current chairman and have someone else come in,” said Benoit Gervais, portfolio manager at Mackenzie, a subsidiary of Power Corp, Barrick’s 10th-largest shareholder.
The IPO could be Thornton’s last chance to change the fortunes of Barrick, a mining company he’s led since 2014. Under his watch, the company’s stock has underperformed rivals Newmont Corp and Agnico Eagle Mines Ltd, and has struggled to capitalise on a historic run-up in the price of gold.
Barrick slipped to third place in global production last year after being overtaken by Agnico.
The company’s struggles threaten to tarnish the reputation of a dealmaker and master networker, who made his name running one of the world’s top investment banks, but hasn’t replicated similar success as a corporate leader.
This story is based on interviews with more than two dozen executives, current and former Barrick employees, bankers and shareholders, many who asked not to be identified because they are not authorised to speak publicly.
Through an outside spokeswoman, Thornton declined to comment.
The IPO is supposed to unlock the value of Barrick’s gold mines in Nevada and the Dominican Republic, which the firm’s leadership has long contended are weighed down by Barrick’s more troubled assets in Africa, Asia and the Middle East.
Through a new, publicly listed company, Barrick would retain majority control of the assets while floating a minority interest to the public.
The Nevada mines have been declining in production in recent years, but the asset is part of the world’s largest gold-mining complex and contributes more than half of Barrick’s profits.
The IPO would also include the Fourmile discovery, which Barrick has called one of this century’s greatest gold finds, and a mine in the Dominican Republic.
Investors said the restructuring comes at their expense, diluting their interest in the operations by as much as 15% to new shareholders.
Portfolio managers at Van Eck, Barrick’s fourth-largest shareholder, met at least three times with company executives this year to push back.
Still, Barrick is pushing ahead with the breakup. On Monday, the company named chief executive officer (CEO) Mark Hill to lead the new North American unit and said the IPO remains on track for completion by year-end after settling a dispute with Newmont over their Nevada joint venture.
Under the agreement, Newmont, which had threatened legal action over alleged mismanagement of the venture, will pay Barrick US$1.95bil as the companies contribute previously excluded properties, including Barrick’s Fourmile project and Newmont’s Fiberline and Mike developments.
In exchange, Newmont will support the IPO, removing a potential snag to Thornton’s restructuring plans.
Shares of Barrick fell as much as 9.7% in New York on Monday, the most since March, after investors were disappointed by the value of the deal.
Long before he joined Barrick, Thornton had established himself as one of Wall Street’s premier dealmakers.
The 72-year-old climbed the ranks at Goldman by growing the firm’s presence in Asia and Europe. He rose to co-president of the firm by the time it went public in 1999 and held that role until 2003.
Thornton sits on several other boards including, Ford Motor Co, Lenovo Group Ltd, and Paramount Skydance Corp, and teaches global leadership at Tsinghua University in China.
An academic paper from 2021 ranked him among the three most centrally connected individuals in the corporate network it analysed.
The proposed IPO is the culmination of a financial strategy that Thornton has pursued for years.
Since becoming chairman in 2014, he’s sought to boost Barrick’s market value by cutting debt and focusing on free cash flow.
But the firm has meanwhile seen its gold output decline and many of its most important operations struggle to hit targets.
Thornton said the restructuring will allow investors to unlock the value of the North American assets.
“The market can value the assets directly, and since Barrick will retain a substantial majority interest, all of our investors can benefit,” he said at Barrick’s annual shareholder meeting in May.
The board has largely pinned Barrick’s lacklustre performance on former CEO Mark Bristow, who was fired last September after missing internal guidance for 14 straight quarters.
But some investors are dissatisfied with Thornton’s leadership.
The chairman received only 81.1% approval from shareholders, lower than the chairmen at Newmont and Agnico Eagle, and well below the average 91.8% support for directors across public companies last year.
The IPO idea didn’t emerge overnight. Thornton has discussed a separation of Barrick’s North American business since at least 2024, according to people who spoke with him about the plan.
It became a more serious proposition last year, as Barrick grappled with setbacks.
The company’s share price lagged competitors even as the price of gold surged.
In Mali, the military government shuttered the company’s giant Loulo-Gounkoto complex and detained employees during a bitter tax dispute. — Bloomberg
