[Barrick Gold’s]Aaron Regent: A New-generation CEO – by Globe and Mail Reporter Brenda Bouw (Originally Published December 18, 2010)

Brenda Bouw is the mining reporter for the Globe and Mail, Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. This article was orginally published December 18, 2010.
When Aaron Regent walks into Ki, a modern Japanese restaurant in the heart of Bay Street, amid a cluster of other dark-suited businessmen during a recent lunch hour rush, his presence is immediately noted.

Within seconds, the hostess greets him as “Mr. Regent” and whisks him and his party to his usual table, a quiet corner booth located alongside a calming rock and marble water feature.

Ki is a regular lunch spot for Mr. Regent, in part because it’s located inside Brookfield Place, the same downtown Toronto office tower that is home to the head office of Barrick, where he celebrates his two-year anniversary as president and chief executive officer next month. The Irish-born executive has spent much of his career around this particular square mile of prime real estate, working either at Brookfield Asset Management (where he was, most recently, co-head of its vast infrastructure group) or within the nexus of companies affiliated with it.

So when he was offered the Barrick job by legendary founder Peter Munk, the physical move was easy – he merely had to change floors. That is where the simple part ended, however.

Barrick is a complicated beast with interests in 25 mines scattered across five continents, each with its own challenges.

And while Mr. Regent joined at a time when investment demand for gold was on the upswing (and still is), that was hardly an unvarnished blessing for the world’s largest producer of the yellow metal.

For a gold company, Barrick had earned a healthy dose of skepticism and even outright disdain from gold fanatics, owing largely to its huge book of contracts, or hedges, in which the company had agreed to sell gold in future years at pre-determined prices. The hedging strategy was a creation of an earlier time, when much lower gold prices prevailed.

It had been a useful tool for smoothing out the volatility and risk in gold – “hedging really built the foundation for Barrick,” Mr. Regent says – but by the time of his arrival in early 2009, the derivatives had become a giant weight on the company. Hedging losses drove Bay Street’s perception of the company, suppressing its stock price, which was remarkably gravity-bound even as gold moved from a low of about $250 (U.S.) an ounce through $1,000 and, more recently, to $1,400.

So his first big move was the painful but necessary winding down of the hedging program, which led to a writeoff of nearly $6-billion. He also cut 80 executive jobs to help slash the budget. Earlier this year, he hived off Barrick’s African assets into a separate publicly traded company on the London Stock Exchange, in hopes that the freedom and scrutiny of a listing would help squeeze more growth out of its high-cost operations.

Today, investors are anxiously awaiting Barrick’s next move, which many believe will be an acquisition after a flurry of recent deals in the sector. Mr. Regent and his team have been noticeably quiet when it comes to deal making since increasing the company’s stake in the Cerro Casale project in Chile in March and, weeks earlier, losing a bid for a controlling stake of the El Morro project in Chile to competitor Goldcorp Inc. (Barrick opposes the way the deal was handled and has taken the issue to court.)

Now that Barrick has bounced back following Mr. Regent’s restructuring, many see it as the logical time for the company to make its next purchase.

If Mr. Regent feels the pressure to pounce, however, it doesn’t show. Carefully cutting off a slice of his tuna burger with a fork and knife, the soft-spoken 44-year-old executive insists he’s in no hurry to do a deal. Of course, he says, Barrick is always looking. He realizes, as most gold executives do, that global reserves of the precious metal are constantly shrinking.

“You shouldn’t be surprised to see us do a transaction,” Mr. Regent says, his voice barely audible over the din of the surrounding lunch-hour conversation and a constant clattering of cutlery and plates. “But I think that we are fortunate that we are in a position where we don’t have to do a deal.”

And despite the handful of acquisitions by its main rivals in recent months – including Goldcorp’s $3.6-billion purchase of Andean Resources Ltd. and Kinross Gold Corp.’s $7.1-billion takeover of Red Back Mining Inc. – Mr. Regent insists Barrick hasn’t been left out of the race for resources. “We don’t feel like we missed anything, let’s put it that way,” Mr. Regent says.
He argues that the company, with a market capitalization of more than $50-billion and an industry-leading production target of nine million ounces within five years (up from an expected 7.7 million this year), can afford to be choosy. Besides, there will be plenty of other opportunities. No major gold asset comes for sale without Barrick knowing about it. “We seem to be everybody else’s exit strategy, and whenever there’s a transaction, our name comes up, which is understandable,” Mr. Regent says.

The calm attitude he portrays comes from the confidence his chairman, the well-regarded Mr. Munk, has shown in his latest recruit. At the company’s annual meeting last spring, Mr. Munk heralded his rising star CEO for his “courage” and his “enormous thinking, enormous conviction,” at Barrick so far.

According to Mr. Regent, who was humbled by those remarks, the two have a close working relationship – yet Mr. Munk remains hands off on the day-to-day running of the business. Mr. Regent dismisses the suggestion that Mr. Munk still pulls the strings at the gold producer he founded nearly 30 years ago.

“Peter doesn’t get involved in the operations,” Mr. Regent says between bites of sweet potato wedges and salad. “Where he is interested is the strategy, corporate development side of things, which is great for us. He has a worldwide Rolodex.”

For the rest of the article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/managing/the-lunch/aaron-regent-a-new-generation-ceo/article1843009/page1/

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