Facing sliding prices for gold and its shares, as well as a shareholder revolt on executive pay, the top brass at Barrick Gold Corp. vowed Wednesday to cut costs and take a hard look at the company’s operations.
Executives of the world’s biggest gold mining company revealed plans to cut at least $500 million (U.S.) from spending on major projects this year, and may consider suspending work at its troubled Pascua-Lama development in South America.
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Last week, institutional investors, including the Canada Pension Plan Investment Board, the Ontario Municipal Employees Retirement System, and Ontario Teachers Pension Plan, expressed concern over an $11.9 million signing bonus awarded by Barrick to co-chairman John Thornton.
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The bonus, paid last June, was used to purchase Barrick shares which are held in trust for Thornton’s children and are subject to a holding period, according to the company’s latest management proxy circular.
“John was prepared to give up his other options. Believe me he was a highly desirable well-known commodity,” Barrick founder and chairman Peter Munk told shareholders. “When we paid the kind of money we paid John to buy Barrick shares with, we had to secure him.”
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Barrick said it would cut its capital spending by $500 million and reduce exploration spending by $100 million.
Work on the Pascua-Lama silver and gold development in the Andes mountains was suspended by an appeals court in Chile amid environmental concerns. Barrick said it will work to address the regulatory concerns.
“We’re serious about disciplined capital allocation,” Sokalsky told shareholders. “That means we need to consider all options, including the possibility of suspending the project.”
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