Investors Push Back on Barrick Chairman's Plan to Spin Off North American Mines

A New Direction for Barrick

Last year, John Thornton, Barrick Mining Corp.'s chairman, seemed prepared to retire following a rocky dozen years in charge. Rather than exit, he wrested authority from his longtime chief executive and is now reshaping the gold miner, with the centerpiece being a proposal to place its North American operations in a separate stock-market listing.

Some of Barrick's biggest shareholders are pushing back at the proposal because they don't want to split their stake in the company's most attractive properties, and they also object to a flotation.

The ex-Goldman Sachs dealmaker's plan to create a separately traded company for Barrick's Nevada and Dominican Republic mines is encountering difficulties. Investors are likely to make the offering a central topic when quarterly earnings are released Monday. The plan was initially announced in December, but Barrick has yet to choose a chief executive for the new entity or say where it will be based.

Why Investors Are Pushing Back

Managers at Van Eck Associates Corp. and Mackenzie Financial Corp. told Barrick in recent months that they oppose the chairman's plan. Franklin Equity Group is also opposed.

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"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, who manages portfolios at Mackenzie, a Power Corp. subsidiary and Barrick's 10th-largest shareholder.

The disagreement over the spinoff is unfolding against a backdrop of record gold prices, which have lifted the broader sector even as Barrick's stock lagged. That has intensified investor impatience with Thornton, especially after Barrick lost the No. 2 global production spot to Agnico last year.

Thornton's Record

This spinoff may represent Thornton's final opportunity to reverse Barrick's slide. Thornton took the helm in 2014. During his tenure, Barrick shares have trailed Newmont Corp. and Agnico Eagle Mines Ltd. The miner has also failed to make the most of gold's record-setting advance.

Barrick's difficulties could damage the legacy of a financier and prolific connector who built his reputation atop one of the world's premier investment banks but has not matched that achievement as a company executive. The reporting for this article drew on conversations with more than 25 executives, existing and former Barrick employees, bankers and investors, most of whom requested anonymity because they lack permission to talk on the record. A request for comment was passed along by an outside spokeswoman, and Thornton declined.

What the Spinoff Would Include

The public listing is intended to reveal greater worth in Barrick's Nevada and Dominican Republic gold mines, which executives have argued for years are being held back by the firm's less stable operations in Africa, Asia and the Middle East. In the proposed structure, Barrick would keep a majority stake in those assets and sell only a minority slice to outside investors.

Output from the Nevada operations has fallen over recent years, yet the property sits inside the world's biggest gold-mining district and generates over half of Barrick's profit. The planned listing would also cover Fourmile, a nearby discovery.

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