Barrick Gold Corp.'s chairman, John Thornton, is facing resistance from investors regarding his plan to spin off a minority interest in the company's North American mines. This move, intended to address Barrick's lagging stock performance and perceived undervaluation, is being met with a lukewarm reception. Investors and analysts, including Pierre Lassonde, chairman emeritus of Franco-Nevada Corp., believe a partial spin-out is a "dumb idea" that might create an "orphan" entity, likely trading at a discount due to Barrick retaining a majority share, insufficient size for major stock indexes, and poor liquidity.
Activist investor Elliott Investment Management LP, which holds a $1 billion stake in Barrick, had been pushing for a complete separation of the North American assets from the company's riskier operations in Africa and other regions. However, the current plan for a partial spin-off falls short of their desired full split. Barrick's exposure to politically volatile regions and copper assets, particularly in Africa and the Middle East, has historically caused its shares to trade at a discount compared to peers like Agnico Eagle Mines Ltd.
The proposed spin-off would include Barrick's major gold mines in Nevada, its Pueblo Viejo operation in the Dominican Republic, and the promising Fourmile discovery in Nevada. These assets are considered politically stable and attractive to investors. While Barrick hopes this will create a "pure gold company" in a desirable jurisdiction, the current plan could take up to 12 months to execute if the board proceeds. Some speculate that a standalone North American unit could eventually attract acquisition interest from companies like Newmont Corp., with whom Barrick already has a joint venture in Nevada Gold Mines, or Agnico.
Barrick has faced operational challenges, including lower-than-expected production and higher costs at its Nevada joint venture with Newmont, as well as a 17% decline in overall output in 2025 to 3.26 million ounces. The company also recently experienced a management shakeup, with CEO Mark Bristow's abrupt departure and the appointment of Mark Hill as interim CEO. The strategic shift represents a retreat from a decade-long focus on expansion in Africa and Asia, which was partly driven by the 2019 acquisition of Randgold Resources Ltd.
