Barrick Gold critic says Munk's departure will be a positive but concerns remain

OTTAWA - The retirement of Peter Munk and a revamp of the board at Barrick Gold are seen as positive moves by a U.S. fund manager who has been critical of the gold miner, but he still has concerns.

Mike Morris of Two Fish Management said Thursday he is worried about the direction Barrick will take under John Thornton, a former Goldman Sachs executive, when Munk steps aside as co-chairman of the board.

"My concern is that Thornton, according to some of the reports I've read, is interested into potentially diversifying into other metals and actually having more capital injected into the company through partnerships with the Chinese," Morris said.

"That is exactly the opposite of what we are looking for."

Two Fish, which has a relatively small investment in Barrick mainly through call options, has sought changes at the gold miner including the break up of the company and the addition of a mining engineer and geologist to its board.

Morris said Thursday he wants Barrick, which became the world's largest gold producer under Munk's watch, to focus on returning cash to shareholders, not growth or diversifying into other metals.

"The whole point of mining copper or mining gold isn't to mine gold or to mine copper, it is to make some money doing it," Morris said.

Barrick said Wednesday that Munk, 86, will retire next year at the annual meeting and that long-time directors Howard Beck and former prime minister Brian Mulroney won't stand for re-election.

The gold miner also appointed a chief operating officer and announced the nomination of four new independent directors.

The additions will increase the number of independent directors to 10 on the 14-member board. Barrick currently has seven independent directors on its 13-member board.

Thornton, who has shared the chairman's duties with Munk since 2012, brings with him a wealth of experience in China and said Wednesday he wanted to help Barrick build a long-term relationship with the Asian powerhouse.

He noted that the cost to develop Barrick's holdings in South America is going to be expensive.

"Both as a financial matter and as a political matter it makes great sense — one could argue — to have a Chinese partner, or partners plural, in that process. That's the kind of thing that I have in mind," Thornton said Wednesday.

The changes at Barrick capped a difficult year for the company that has seen its shares lose half their value.

The entire gold sector has been affected by a sharp drop in bullion prices.

In addition, Barrick has been forced to suspend work at its massive Pascua-Lama mine it is building in South America due to court and government decisions.

Barrick has taken billions in writedowns this year, slashed its dividend and begun to slim down its organization. At midday Thursday, its shares were down nearly $20 from their 52-week high.