Gold mining giant Barrick (TSX, NYSE:ABX) is reportedly seeking a deal with China, hoping to lift the company’s balance sheet and expands its markets.
The move, reports Bloomberg, is likely to be announced Wednesday at the firm’s board meeting, when current co-chairman John Thornton, is confirmed as Barrick’s next chairman, succeeding founder Peter Munk, 86.
After months of declining gold prices, a second-quarter loss of $8.6 billion and project writedowns of over $13 billion so far in 2013, Barrick’s stock is trading around the $19 mark, making it one of the worst performers in the sector this year. The company has slashed its dividend by 75% and lost 41% of its market value.
Being the most debt-heavy company in the gold sector has meant for Barrick to be among those that have lost the most due to volatile bullion prices.
“The company has never been known for managing its cash or resources well or, for that matter, being investor friendly,” writes Steve McDonald, bond strategist for The Oxford Club.
“It has a history of being too aggressive in its growth efforts and having too many underperforming assets that are too spread out,” he adds.
But analysts see Thornton, 59, as the one who could change the company’s direction. The former Goldman Sachs Group Inc. President seems quite open to a reorganization of the entire business, including the possible acquisition of mining assets in other commodities, such as copper, they said.
He also has experience dealing with Chinese firms, as he helped start up a business leadership program at Beijing’s Tsinghua University and sits on the board of China Unicom, the country’s second-biggest cell-phone carrier, Thornton is also a member of China Investment Corp.’s international advisory board, reports Bloomberg.
The U.S.-born businessman worked for Goldman Sachs Group from 1980 until 2003, helping to develop its European mergers-and-acquisitions business and serving as chairman of its Asian business.
Image: Screen grab of Brookings Institution via You Tube.