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New Barrick CEO looking at all M&A options

by Cameron FrenchReuters
December 24th, 2008

Aaron Regent, named as the next chief executive of top gold producer Barrick Gold (ABX.TO) on Tuesday, plans to maintain the company's focus on growth through corporate takeovers, and says he would be open to looking at all opportunities that present themselves.

"I think the environment over the next little while, particularly with the distress in the broader market. ... I think there will be some unique opportunities," Regent, 43, said in an interview.

"If you see some acquisitions, I don't think that would be a surprise."

The former president of Canadian nickel miner Falconbridge will take the job on January 16, ending a search to replace Greg Wilkins, who went on medical leave in March and formally resigned in July. Company founder and Chairman Peter Munk has been filling in as interim CEO.

Regent joins the company as weak metals prices and tight credit markets have forced companies to cut costs and focus on capital preservation.

With $1.7 billion in cash as of September 30 and strong cash flows, Barrick is in a stronger position than most, and Regent suggested the company could look beyond the single-property acquisitions that have been common in the sector over the past year.

"As a broad comment, I think it makes sense to look at all opportunities, and I think the most important thing is what kind of opportunities are going to create the most value for shareholders," he said.

An accountant by training, Regent is in the same mold of previous CEOs Wilkins and Randall Oliphant, part of the new breed of mining executives with backgrounds in finance, rather than prospecting.

His most recent posting as co-CEO of Brookfield Asset Management's infrastructure group (BAMa.TO) gave him additional experience in corporate finance, which should be handy as he deals with funding demands for new projects key to replacing older mines and lowering costs.

"Barrick's problem is like all of the gold companies in that they're on a treadmill. They have to replace ounces. A money man with his background will be useful," said John Ing, president of Toronto investment dealer Maison Placements.

Barrick has used hedging, or forward selling of gold, to fund some of its projects. But the company has gotten out of the game of hedging current production, which became a practice that weighed on its shares when gold prices started to surge in 2002.

Asked about whether the company would use hedging in the future, Regent said he had his own views on the subject, and that he would spend a lot of time discussing it with other company managers.

"There's obviously a number of different factors that go into a hedging strategy -- what obviously makes sense from a risk management perspective as well as what's acceptable from the market," he said.

"So there's always a tension that you have to manage."

 

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