Camflo

"The Mercur mine in Utah was Munk’s next acquisition target, and Bob Smith was front and centre in the decision to go for it. Mercur was owned by Texaco, but had originally been developed by the mining arm of Getty Oil Company. With permission from Texaco White Plains’ senior executive, Peter Byur (later Texaco’s chairman and CEO), Munk sent his newly acquired Camflo team of mining engineers to do a two-day appraisal of Mercur. Bob Smith, the chief, took two of his Camflo geologists with him, Brian Meikle, a McGill graduate, and Alan Hill, a former Noranda mine manager. Smith and his team liked what they saw. Mercur was producing 70,000 ounces a year, but Smith reported that production could be increased dramatically, that the base cost per ounce could be lowered just as dramatically, and that he could run the mine much more efficiently."

"unk’s strategic thinking shifted into high gear. As his inves| \ / tigation and research progressed, he became convinced that even with its mountain of debt Camflo would bring new credibility to Barrick Resources. The key factor was that Camflo was producing gold in significant quantities, and had acknowledged and reputable management under Bob Smith, whereas the Renabie production was only 16,000 ounces in 1984. Munk needed gold production against which he could obtain major financing."

"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."

"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!"

"The last thing Bob Fasken wanted to do was sell out to me. He had a private jet and had a good time with it. Nobody wants to give up a company that they’re living off. His two or three sons were with him in the company. It was a family bonanza for him, and Camflo was also his company. Who wants to sell out? And he was a fishing buddy with the big shots in the Royal Bank. But the hundred million was /is debt."

"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."