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Activist hedge fund Elliott Management has built a large stake in Barrick Mining, according to people familiar with the matter, after the world’s second-largest gold producer struggled to capitalise on a blistering bullion rally.
Elliott’s investment comes as the Toronto-based miner has pledged to refocus on its lucrative North American business after the sudden departure of its chief executive Mark Bristow in September, adding to speculation that the company could be planning a break-up or asset sales.
Elliott’s stake puts it among Barrick’s 10 largest investors, the people said. That would mean the hedge fund’s holding is worth at least $700mn (C$1bn).
As bullion has soared to record highs in recent months, boosting gold miners’ valuations, Barrick’s share price performance has lagged rivals and the company has faced a series of setbacks, including losing control of a key mine in Mali.
However, the people said Elliott was encouraged by the idea that Barrick could split into two companies, separating its higher-growth North American operations from its mines in riskier regions across Asia and Africa.
Barrick’s board, led by chair John Thornton, recently discussed separating the two parts of the business, as well as outright sales of its African and Pakistan assets, Reuters reported last week.
This would in effect unravel the modern-day Barrick that was created in 2019 in an all-stock acquisition by Randgold.
The exact size of Elliott’s stake could not immediately be established, nor could its precise demands of the mining company. Elliott and Barrick declined to comment.
Barrick’s New York-listed shares climbed almost 3 per cent in pre-market trading on Tuesday following the Financial Times’ report on Elliott’s stake.
Bristow, a swashbuckling South African executive who took Randgold public in 1997, departed ahead of schedule in September after facing criticism for repeatedly failing to meet production and cost targets.
During his tenure, Bristow masterminded the development of the $9bn Reko Diq copper-gold mine in Pakistan, which stands to be one of the world’s largest copper mines once complete.
But shareholders have raised concerns about the project and the risks of operating in Balochistan province, which is home to a violent separatist movement.
The market value of Barrick, which has its primary listing in Toronto and secondary listing in New York, was $62.5bn (C$88bn) at market close on Monday, more than double its valuation a year ago.
But its shares are up less than 55 per cent over the past five years, compared with 232 per cent and 144 per cent gains for rivals Kinross Gold and Agnico Eagle respectively.
With $76.1bn of assets under management, Elliott is regarded on Wall Street as the most formidable activist investor, having unveiled multibillion-dollar positions in household names such as Pepsi, BP and Honeywell over the past year.
The Florida-based firm, founded by Paul Singer, is well acquainted with the mining sector, as it holds a sizeable stake in Anglo American, which recently agreed to merge with rival Teck Resources. Elliott also previously targeted Kinross, leading it to boost its share buyback programme.
Barrick’s stock has been propelled to 13-year highs in recent months by a huge gold find at its Fourmile project in Nevada, which studies indicate has the potential to yield as much as 750,000 ounces of gold a year. The company says it is one of the biggest discoveries of the precious metal this century.
Barrick’s North American operations also span a host of other prized gold mines in Nevada through a joint venture with Newmont, as well as mines in Dominican Republic.
Barrick also operates copper and gold mines in higher-risk territories from the Democratic Republic of Congo to Papua New Guinea, largely a legacy of the former Randgold business.
In his first public appearance since replacing Bristow as chief executive on an interim basis, Barrick veteran Mark Hill said this month he saw “a big opportunity” in focusing more on the North American business, particularly Nevada, calling it the “next big growth area”.
Hill said the company was focused on improving operational performance and value creation.
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