American Barrick

"In the second half of 1986, American Barrick, a newcomer that had existed for less than four years, took a run at the mighty Britishbased Consolidated Goldfields, a company that had been founded by Cecil Rhodes in the previous century and that was a member of the Financial Times 100 index. With a market capitalization of more than £2 billion, compared with American Barrick’s puny couple of hundred million dollars, Consgold was startled, to say the least, at the Canadian company’s chutzpah. Munk built a position of 4.9 percent of Consgold with purchases on the open market, but failed to consummate the takeover when the stock price took off in response to his initiative. The gutsy move, however, paid off in the long run. Not only did Barrick end up with a profit of $9.4 million when it sold its position, but the takeover bid attracted the attention of some of the biggest stock-market players in the world—people like the Oppenheimer family and Sir James Goldsmith, who became part of Munk’s network and led him to great opportunities later on."

"As a prelude to the reorganization, Munk had successfully completed, in September, a deal with Merrill Lynch Canada Inc. for the sale of C$43 million worth of units of American Barrick’s common shares and gold purchase warrants. Each unit offered consisted of one common share and two warrants to purchase gold at US$460 an ounce. For those who had faith (or were prepared to bet) that the price of gold would rise beyond US$460 by September four years later, the enticement was complete. Merrill Lynch had no trouble selling them."

"Just before Christmas 1987 Tony Novelly arrived at Peter Munk’s Hazelton Avenue offices to announce that Novelly’s Apex Oil Company, his holding company for Clark Oil, was in serious trouble. Apex, based in St. Louis, was one of the largest private companies in the U.S., with 1987 revenues over US$2.5 billion. It also owned, with Clark, two refineries in the Midwest with a combined capacity of 160,000 barrels per day, and 960 gas service stations. Novelly had joined Munk’s Barrick Resources board in 1984 and was a strong investor, with more than half a million American Barrick shares in his portfolio. He told Peter Munk that Apex had just defaulted on its loans and was in receivership. Novelly pleaded with Munk to have Horsham take over Apex. He asked Munk to be one of the bidders when the bankruptcy was adjudicated for the whole Apex structure. “Because the banks need my release ... otherwise I’ll sue them,” Novelly said, “If you do it my way, you will have a very strong advantage because I won’ give the release to anybody else. In return I want a participation with you.”"

"268 GOLDEN PHOENIX company was engaged or embarking upon a brand new business, and had zero credibility in mining. And so itshould have. The chances or the odds that anyone would have given you that the company would be around nine years later in the gold business, let alone double its share value, would have been very small indeed. The fact that those share values have gone up twenty times is a miracle. It’s a phenomenon that will go down in the annals of business history. At that time, we deliberately and with full recognition of the entrepreneurial spirit—a fundamental component of the American Barrick philosophy—said to ourselves that the important thing in our business is to buy the time during which we can prove right our concept and our approach."