Despite writedown, Barrick digs in on Zambia copper play – by Pav Jordan (Globe and Mail – February 15, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Barrick Gold Corp. says it can still make its African copper business pay off, despite a multibillion-dollar writedown on Zambian mines hit by skyrocketing costs.

Toronto-based Barrick said on Thursday it took a $3.8-billion charge on its copper business in the fourth quarter, marking the second Canadian miner to be shaken this week by bets made two years ago, when commodity prices were soaring.

The charge stoked some of the worst fears of investors who have long fretted that buying the assets in 2011 under the $7.3-billion acquisition of Equinox Minerals Ltd. was a mistake.

“Obviously I’m disappointed that we’ve had to take this impairment, and it’s a sizable impairment, in hindsight, in terms of what we paid for it,” Barrick chief executive officer Jaime Sokalsky said in an interview Thursday with The Globe and Mail.

“But it is a big asset in a world-class copper belt and ultimately, if we can get the costs under control and ultimately get a higher copper price down the road – which I think has a good likelihood of happening – this asset could be very very valuable for us.”

Barrick’s charge on its copper business Thursday came hours after Kinross Gold Corp., another Toronto-based miner, announced a massive writedown on its African operations, lengthening the growing list of global miners that have fallen victim in recent months to some of the worst cost inflation in decades.

Barrick bought Equinox in 2011, zeroing in on the Lumwana copper mine. Under the direction of former chief executive officer Aaron Regent, the massive company was looking for ways to grow in a world where large new gold finds were increasingly rare and China’s appetite for copper was peaking.

In sealing the deal, Mr. Regent braved vocal investor opposition, and joined a growing list of mining CEOs pursuing large deals to build resource portfolios, and feed booming demand from China.

Like other corporate chiefs before and after him, Mr. Regent lost his job in June as investors rebelled and the stock price sank to some of its lowest levels since the global economic crisis, ushering Mr. Sokalsky to the helm and with him, a radical shift in strategy at Barrick to focus on investor returns rather than growth.

For the rest of this article, please go the Globe and Mail website: http://www.theglobeandmail.com/globe-investor/despite-writedown-barrick-digs-in-on-zambia-copper-play/article8657127/

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