Barrick

"Renabie required about $15 million for the rehabilitation of its mine and ore-processing equipment. How did Barrick and Campbell raise that kind of money? It was Ned Goodman, one of Canada’s leading financiers, who had the answer. “Ned Goodman is as bright as anybody at devising things,” says Birchall. “He invented a gold royalty interest scheme which we then publicly offered. By a miracle we sold it, and raised the $15 million. It was the Barrick—Cullaton Gold ‘Trust. When that was done we had $15 million and a half-interest in a gold mine that was going to be rehabilitated.”"

"On Smith's advice, Munk put in a bid. When it turned out to be close to but lower than Exxon’s, who came in at about $60 million, Munk withdrew. But then Exxon backed off and departed. Munk lowballed with a bid of US$31 million with a sweetener: Texaco would get half of any proceeds should gold go over US$385 an ounce, topping out at US$9 million. Texaco took Munk’s offer. The next step was to finance the deal. Munk’s recent feat of paying off the Royal’s $100-million Camflo debt gave him new credibility. The Continental Bank Company gave Munk an equity loan of US$31 million. With the funds already in hand, Barrick closed the Mercur deal in June 1985."

"Munk got his money on December 31, 1984 (he was skiing on the mountains of Klosters). From the proceeds the Gold Company of America advanced to Barrick US$40 million (C$53 million) against Barrick’s commitment to deliver to the Gold Company of America each year a number of ounces of gold that varied with the price of gold. For example, in 1984 the price was US$365, against which Barrick delivered 8,767 ounces. That package produced C$53 million, which was used to pay the Royal Bank debt. In January 1985, Munk sold the Camflo energy holdings for $32 million. With the initial private placement of $30 million made before the finalization of the Camflo merger, the total of $114 million was more than enough to take out the Royal Bank debt. It was a remarkable achievement by any standard, starting with Peter Munk’s practically door-to-door effort for the private placement; he claims to have approached at least fifty potential investors to raise that key first $30 million. Without it there would have been no Camflo merger."

"The massive financing requirements for Goldstrike would come in 1989, but with the gold reserves that were coming onstream at that little mine, gold-secured loans promised to meet all requirements. To begin the Goldstrike financing Peter Munk went to Oliver Baring of the London financial house Warburg Securities at the beginning of September. He retained Warburg to assist Barrick in its negotiation of financing terms and evaluation of alternatives, including the preparation of the information memorandum or any other aspect of the transaction."

"The first action was the open-market purchase by Barrick of 4.9 percent of Consgold. Rudolf Agnew, the CEO of Consgold, perceived the potential of a Munk takeover bid, and was threatened because he thought that was what it was. Agnew made immediate contact with Munk. The two men met on January 13, and discussed the promising possibilities of Consgold’s two mines in North America—Mesquite and Chimney. At that time, the Oppenheimer family of South Africa were the largest single shareholders of Consgold, with about 30 percent of its stock. Under British law Munk couldn’t talk to or deal with the Oppenheimers. It would disqualify Barrick from bidding as a “concert party bid."

"Peter Munk had never seen the gold mine he fought so hard to buy. His decision to go for it was based on his faith and trust in his mining team. As soon as the deal was closed, Munk says, Bob Smith went out with his people, Dr. Meikle and Alan Hill. They started to drill and they became very excited. They wouldnt’ tell me how excited they were because I don’t know anything about drill holes. At the point Barrick took over Camflo, Bob and his people had little credibility. There was nothing but friction at Camflo. So I had to learn by experience, and my confidence in them grew over the years as they performed and I realized how brilliant they were, and how much integrity they had. But at that time, if they had said to me that we had a billion-dollar mine there in Goldstrike, believe me, I would have run for the hills!"

"That, to me, was a very great promise. In the middle of this Consgold turmoil, which lasted almost a year, we made several million pounds on the transaction because, as we kept buying, the attendant publicity suddenly focused on Consgold as a takeover target. In fact, the Oppenheimers themselves then subsequently made a bid for more Consgold stock. The move on Consgold promised to give Munk much-needed mines, which “I would get later on by buying Goldstrike, but at that time I needed the next step.” A week after Munk met with Agnew, Bill Birchall received word that Hill Samuel was interested in buying all or any part of Barrick’s 5-percent shareholdings in Consgold. That useful information was of great comfort to Peter Munk, whose Consgold play had driven the market value of Barrick’s 4.9-percent holding up by over $10 million and rising. That would mean a tidy profit on an investment made but a few months earlier."

"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."

"Peter Munk’s dealing in Barrick’s gold interests, holdings and subsidiaries was becoming increasingly complex and sophisticated as a result of the interrelated Camflo holdings. Everything had to be simplified for investors to easily understand. By the end of 1986 articles in the press on Munk included charts to enable readers to track Munk’s holdings and interests."

"In every person’s life there comes an opportunity which, if grasped, changes his life. Equally so in corporations; every highly successful entrepreneur has made his corporation suc- cessful by recognising and seizing that chance. I strongly feel that the Apex deal is such a chance—a unique opportunity that can change Horsham’s destiny. It will do so by moving it to a more rarefied level, allowing its future activities to be more creative and consequently much more attractive to investors, thereby putting it amongst those few corporate “movers and shakers” to whom the right size and quality of deals come automatically. In addition, it will give us a new concept to sell and, by being seen to move away from its passive holdings in Barrick, will also revive new investors’ interest and open the door to a whole range of new constituents—to whom the “Barrick gold story” is now somewhat “old hat.”"

"The plan had been to have Barrick acquire a 4.9-percent share block in Consgold. Barrick could then move to acquire control, sell at a profit, or—the real objective—use the block as leverage to get Consgold to sell its two North American mines, Mesquite and Chimney, to Barrick. That objective was on the verge of being reached after discussions between Munk and Rudolf Agnew, Consgold’s chairman. But the price of Consgold shares moved beyond making financial sense, driven so high by the inappropriate Capel intervention that Barrick could no longer compete. Peter Munk does not tolerate being deceived by anyone—let alone professionals whom he has retained to advise and act for him, and who betray his trust. The James Capel Consgold activities were completely unacceptable. It was time to sue."

"Gerry Schwartz and Anthony and those guys look at six deals a week! I hate deals. When I do deals, it upsets me, makes me nervous. I always feel that I’m going to make a mistake. I do them to attain my strategic objectives. It sometimes takes a few deals to get there. But I never do a deal per se. I hate it! It’s a totally different mentality. Yes, I did Lac, but God save me from another Lac. And yet I'll do one next year again— maybe because I have to—for getting Barrick in position. But its a different mindset. Their business is to look at deals, like investment bankers. Gerry’s background was as an investment banker. Anthony had some time at First Boston, the investment bankers. I like people like Bill Birchall and Greg Wilkins and Bob Smith, who have run a business for twenty or thirty years and build permanent entities and value for their shareholders. Different mentality."

"Mulroney was involved in bringing together Paul Desmarais’s Montreal-based Power Corporation and Barrick to form Barrick Power Gold Corporation, which would test the gold mining opportunities in China. Munk’s long-time colleague Neil MacLachlan was named president of the new company. In November 1994, also with Mulroney’s active involvement, Barrick Power signed letters of intent with China's gold agency, China National Gold Corporation."

"The reality check is that I call my colleagues. That used to be Gilmour, now it’s also Birchall, always, for the last thirty years. It’s also Greg Wilkins, and others whose judgement we trust. Certainly when it comes to Barrick it’s Smith. Then I pitch them and then usually they go along. But after all, their destiny is tied up with their decision so they are just as involved as I am. Then we have another meeting and we have a fifth meeting and eventually we come up with a platform and a position. We listen to each other and talk, and then boom, we go. That's how it works."

"The first company pursued by Barrick in Indonesia was Bre-X. Two Barrick geologists, Larry Kornze and Paul Kavanagh (who later joined Bre-X as a director for his geological expertise), visited the Busang site in October 1993. Drilling had begun just days earlier. Kornze and Kavanagh recommended that Barrick begin discussions with Bre-X, and their company did so. In November 1993, Bre-X chief David Walsh proposed a deal to Barrick, involving money to finance exploration by Bre-X, whose shares were selling for pennies. But the proposal didn’t fly. Bre-X really didn’t want to dance with Barrick, at least not on Barrick’s terms, which included Munk’s unalterable principle that down the line he had the right to assume control of Busang."

"Barrick has to be challenged. This company has to have a set of goals as attainable, as specific and as exciting as the first set was."