“We cannot have a Greek election determining the future of the global economy.”
- Canadian Prime Minister Stephen Harper
“"On behalf of our Board, I would like to thank Aaron [Regent] for his significant contribution to Barrick's development. We are fully committed to
maximizing shareholder value, but have been disappointed with our share price performance.”
- Barrick Gold founder and chairman, Peter Munk
I was all set to type out another context-rich paragraph on the trials and tribulations of the European debt crisis and the ECB’s constantly evolving
role, using Prime Minister Harper’s remarkably succinct quotation as a touchstone, but my plans were thrown into disarray by an almost equally succinct
statement from Peter Munk, founder Barrick Gold, of the world’s biggest gold company. Aaron Regent, the man in charge since Jan. 16, 2009, was fired this morning amid disappointment over the company’s share price. Since
joining the company, Barrick’s share price has climbed 3.9 percent, short of the 13.3-percent gain by the S&P/TSX index of gold companies. The most
controversial decision by Regent during his tenure was the $7.7-billion takeover of copper miner Equinox in a bet on the global economy. Widely criticized
for diluting what many investors considered one of world’s best pure-play gold miners, Regent stuck to his guns and pushed the takeover through to
completion. It must be noted that since the takeover in June, 2011, Barrick shares have dropped almost 7 percent but the broader TSX gold index has slumped
18 percent. Perhaps Mr. Munk was looking at the wrong chart -- or at least the wrong chart as far as Regent’s career is concerned.
As the world’s largest gold company and one of the most widely-held stocks in Canada, the ouster of Regent and the installation of CFO Jamie Sokalsky as
CEO jumps to the top of our priority list. Let’s remember that Munk has done this before, firing Randall Oliphant as CEO in December, 2003, when Oliphant’s
hedging strategy worked against Barrick’s gold price. Munk doesn’t suffer stock underperformance, at least not for long. We need to take a look at the
company’s position in the industry, its costs-per-ounce relative to the rest of the industry… all of the metrics gold-stock investors used to judge the
merits of one company against another. I want to know just how badly, or well, the company was operating under Regent. Also, let’s take a look at the
performance of gold and copper and put them into the context of the European debt crisis, economic growth and the performance of the U.S. dollar and euro.
But most of all, I want to hear from Barrick shareholders.
Now, the ECB. Ahem. The European central bank left its benchmark interest rate unchanged this morning in the face of political pressure to stimulate
growth and perhaps shore up the region’s banks and save the world. It seems ECB boss Mario Draghi’s super-suit was at the cleaners. Draghi will speak to
the media, addressing the decision and providing context to unfolding events in Europe. We’ll take portions of the media conference, including the Q&A.
I’m running late so must be brief with our other top stories. The Globe and Mail reports this morning that the U.S. hedge fund that forced Telus Corp. to
retreat from its plan to collapse the dual-share structure -- and profited from the outcome -- is shopping its almost 19-percent voting stake in telecom
company. Mason Capital Management has hired Blackstone Group LP to seek a buyer for the $2-billion stake, an unnamed source tells the Globe. Mason didn’t
even pay for breakfast the next morning. Hmph.
Sprott has agreed to buy hedge fund manager Flatiron. We’ll take a look at what Flatiron is bringing to the party.
Every morning Managing Editor Marty Cej writes a "chase note" to BNN's
editorial staff listing the stories and events that will be in the spotlight
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