barrick gold corporation mines & money – december 2003
TRANSCRIPT
Barrick Gold CorporationMines & Money – December 2003
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MINES & MONEY: The Impact of Consolidation on Exploration MINES & MONEY: The Impact of Consolidation on Exploration
MINES & MONEY: The Impact of Consolidation on Exploration
FLIGHT OF SPECULATIVE CAPITALLOW METAL PRICES
CONSOLIDATIONMINES & MONEY: The Impact of Consolidation on Exploration
CONSOLIDATION
PRICES
MINES & MONEY: The Impact of Consolidation on Exploration
2000
Billiton Rio Algom
Phelps Dodge Cyprus Amax
Grupo Mexico Asarco
Rio Tinto North
MINES & MONEY: The Impact of Consolidation on Exploration
Billiton BHP
2001
14 mergers/acquisitions
+
10 mine transactions+
Barrick Gold CorporationMines & Money – December 2003
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MINES & MONEY: The Impact of Consolidation on Exploration
CONSOLIDATION
THE FORCESTHE FORCES
THE OUTLOOKTHE OUTLOOK
MINES & MONEY: The Impact of Consolidation on Exploration
THE FORCESTHE FORCES
1. Investor Demand– Large and profitable– Continual growth
MINES & MONEY: The Impact of Consolidation on Exploration
THE FORCESTHE FORCES
GOLDGOLD
MICROSOFTMICROSOFT
$100B
MINES & MONEY: The Impact of Consolidation on Exploration
2. Improve Rate of Return– Reducing operating costs– Improving margins– Operating smarter– Increasing productivity– Synergies
THE FORCESTHE FORCES
MINES & MONEY: The Impact of Consolidation on Exploration
3. Increase Production and Growth– Less exploration– Fewer discoveries
THE FORCESTHE FORCES
MINES & MONEY: The Impact of Consolidation on Exploration
1998 PRODUCTION
MARKET CAP
40companies
14
THE FORCESTHE FORCES
Barrick Gold CorporationMines & Money – December 2003
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MINES & MONEY: The Impact of Consolidation on Exploration
1998 2002PRODUCTION
MARKET CAP
40companies
22companies
6
THE FORCESTHE FORCES
MINES & MONEY: The Impact of Consolidation on Exploration
1998 PRODUCTION
MARKET CAP
40companies
8
THE FORCESTHE FORCES2002
22companies
MINES & MONEY: The Impact of Consolidation on Exploration
2002
22companies
PRODUCTION
MARKET CAP9
THE FORCESTHE FORCES1998
40companies
MINES & MONEY: The Impact of Consolidation on Exploration
2002PRODUCTION
MARKET CAP
1998
THE FORCESTHE FORCES
MINES & MONEY: The Impact of Consolidation on Exploration
§ Economies of scale§ Need to improve ROR§ Need for growth
THE FORCESTHE FORCES
MINES & MONEY: The Impact of Consolidation on Exploration
THE IMPACT
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MINES & MONEY: The Impact of Consolidation on Exploration
GOLD EXPLORATION SPENDING
BARRICKNEWMONT
ANGLOGOLD
BARRICKNEWMONT
ANGLOGOLD
1997 2001
8% 21%
$3.3 B $0.9 B
MINES & MONEY: The Impact of Consolidation on Exploration
97
5.2
98
3.7
99
2.8
00
2.6
01
2.2
02
1.9
DOWN
63%
US$ billions
TOTAL EXPLORATION BUDGETS
MINES & MONEY: The Impact of Consolidation on Exploration
NICKEL$1.69/lbNICKEL
$1.69/lb1998
COPPER61¢/lb
COPPER61¢/lb
1999
GOLD$250/oz
GOLD$250/oz
1999
MINES & MONEY: The Impact of Consolidation on Exploration
DECREASED JUNIOREXPLORATION SPENDING
§ Lack of risk capital§ Asian crisis§ Low prices
MINES & MONEY: The Impact of Consolidation on Exploration
EXPLORATION CUTBACKS
§ Loss of 8 mining and exploration companies in 2001§ Loss of $166 million in exploration budgets
MINES & MONEY: The Impact of Consolidation on Exploration
US$ millions
NEWMONTNORMANDY NEWMONTNORMANDY
EXPLORATION CUTBACKS
PRE
$111
POST
$73
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MINES & MONEY: The Impact of Consolidation on Exploration
EXPLORATION CUTBACKSUS$ millions
BHP-BILLITON BHP-BILLITON
PRE
$200
POST
$136
MINES & MONEY: The Impact of Consolidation on Exploration
US$ millions
BARRICKHOMESTAKEBARRICKHOMESTAKE
POST
$104
EXPLORATION CUTBACKS
PRE
$149
MINES & MONEY: The Impact of Consolidation on Exploration
ALTO CHICAMA PROJECT
7.2M ozreserve
7.2M ozreserve
MINES & MONEY: The Impact of Consolidation on Exploration
EXPLORATION STRATEGIES
§ 5 million-ounce-plus deposits§ ROR that exceeds cost of capital
MINES & MONEY: The Impact of Consolidation on Exploration
3310105 MILLION-OUNCE DEPOSITS
1999 - 20031999 - 20031994 - 19981994 - 1998
MINES & MONEY: The Impact of Consolidation on Exploration
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MINES & MONEY: The Impact of Consolidation on Exploration MINES & MONEY: The Impact of Consolidation on Exploration
THE INVESTMENT INDUSTRY
FEWERMINING
COMPANIES
FEWERANALYSTSFEWER
STOCKS
MINES & MONEY: The Impact of Consolidation on Exploration
96
5.4
97
4.9
98
1.7
99
1.2
00
0.3
01
0.9
02
1.9
US$ billions
MINING INDUSTRY FINANCINGS
MINES & MONEY: The Impact of Consolidation on Exploration
REDUCED EXPLORATION R&D
AUSTRALIA
60%
IN 3 YEARS
§ CAMIRO: 4 fewer sponsors§ MIRA/AMIRA: merge to
reduce competition for sponsors
MINES & MONEY: The Impact of Consolidation on Exploration
REDUCED EXPLORATION R&D
LESSR & D
SPENDING
LESSEXPLORATION
SUCCESS
MINES & MONEY: The Impact of Consolidation on Exploration
TECHNOLOGICAL ADVANCES
§ Quantec’s Titan System– Deeper penetration– Mapping at depth
§ Hyperspectral Imaging– Map different alteration minerals
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MINES & MONEY: The Impact of Consolidation on Exploration
TECHNOLOGICAL ADVANCES
LESSR & D
SPENDINGSHORTTERM
SAVINGS
MINES & MONEY: The Impact of Consolidation on Exploration
SYNERGIES AND OPPORTUNITIES
§ Larger contiguous land packages§ New exploration areas§ Spin-off opportunities§ Increased market cap attracts more
attention
MINES & MONEY: The Impact of Consolidation on Exploration
THE OUTLOOKTHE OUTLOOK
WILL CONSOLIDATION CONTINUE?WILL CONSOLIDATION CONTINUE?
MINES & MONEY: The Impact of Consolidation on Exploration
THE OUTLOOKTHE OUTLOOK
§ Shortage of new discoveries§ Potential industry-production declines§ Investor interest in growth prospects§ Increase pressure on low-growth
companies to acquire§ Inter-company swaps and reshuffles
MINES & MONEY: The Impact of Consolidation on Exploration
THE OUTLOOKTHE OUTLOOK
MAJORS?
MAJORS?
MIDCAPS?
MIDCAPS?
JUNIORS?
JUNIORS?
MINES & MONEY: The Impact of Consolidation on Exploration
THE OUTLOOKTHE OUTLOOK
BARRICK
§ 4 new mines§ 5-year timeline§ 2 million new ounces§ Starting in 2005
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MINES & MONEY: The Impact of Consolidation on Exploration
The Impact of Consolidationon Exploration
The Impact of Consolidationon Exploration
MINES & MONEY: The Impact of Consolidation on Exploration
DISAPPEARING EXPLORATION DOLLARS
The Impact of Consolidationon Exploration
The Impact of Consolidationon Exploration
INVESTORDEMANDS
INCREASEDCOMPETITION
LOWERPRICES
LOWERBUDGETS
LOWERR&D
FEWERJOBS
NEWSYNERGIES
EXPANDEDHORIZONS
MINES & MONEY: The Impact of Consolidation on Exploration
DISAPPEARING EXPLORATION DOLLARS
INVESTORDEMANDS
INCREASEDCOMPETITION
LOWERPRICES
LOWERBUDGETS
LOWERR&D
FEWERJOBS
NEWSYNERGIES
EXPANDEDHORIZONS
BIG COMPANIES NEED TO SPEND MORE
MORE SPECULATIVE CAPITAL
WE NEED A CONTINUING HIGH GOLD PRICE
MINES & MONEY: The Impact of Consolidation on Exploration
MINES & MONEY: The Impact of Consolidation on Exploration MINES & MONEY: The Impact of Consolidation on Exploration
FORWARD LOOKING STATEMENTCertain statements included herein, including those regarding development schedules and production constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Barrick or of the gold mining industry to be materially different from future results, performance or achievements expressed or implied by those forward looking statements. These risks, uncertainties and other factors include, but are not limited to, changes in the worldwide price of gold or certain other commodities and currencies and the risks involved in the exploration, development and mining business. These factors are discussed in greater detail in Barrick’s most recent Form 40-F/Annual Information Form and Management’s Discussion and Analysis of Financial and Operating Results” on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities.
Barrick expressly disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, events or otherwise.