Gold sector run up reminds Barrick CEO Mark Bristow of a time when it didn’t end well

Описание: Maintain fiscal discipline, warns Mark Bristow, president and CEO of Barrick Gold.

This week Bristow spoke to Kitco Mining at the Gold Forum Americas / XPL-DEV 2024 in Colorado.

Gold has hit several all-time highs in 2024. The gold miners, measured by the GDX, are up about 32% year to date. Barrick has been lagging its peers, up just 18% over the same period.

The run in gold has spurred some big transactions, notably AngloGold Ashanti buying Centamin for $2.5 billion and Gold Fields acquiring Osisko for $2.16 billion in an all-cash deal—all in the past month. Bristow warns that the sector could be getting ahead of itself.

“If you recall…back in 2010 when the gold price started moving materially, and it went through the $1,000 mark for the first time, everyone chased it,” noted Bristow, who was running Randgold Resources at the time. “Everyone was updating, using higher and higher gold prices. [We] decided to stay at $1,000, because there was no change in input costs.”

“That's really fundamental, because you can raise the gold price, but what it does is often takes you outside your old body and really dilutes the value of your asset,” warned Bristow.

The run up early last decade ended with a crash by 2013. The GDX dropped by nearly two-thirds.

“If you use a gold price that goes beyond your all body boundaries, then the risk is you dilute your feed grade. That means you've got to spend more capital to expand your processing facilities to produce the same amount of gold. That doesn't make a lot of sense.”

Coverage of the Gold Forum Americas / XPL-DEV 2024 is sponsored by Metalla Royalty.

0:00 - Barrick Gold’s production pipeline
3:11 - Frustrating years for Barrick Gold investors
5:22 - Barrick Gold versus Newmont
7:35 - Business decisions at Barrick with high gold price
10:25 - Should Barrick Gold hold gold on its balance sheet instead of cash?
13:10 - Revisit conservative gold price?
16:41 - Any regrets not buying Great Bear?
18:00 - Is consolidation getting more urgent?
19:58 - Recovering from past excesses when gold price ran
22:04 - Working in challenging jurisdictions

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