ABX Barrick Gold Corp. (BC) (delisted)

Former fund manager Catherine Raw will be gold producer's fourth CFO in five years

By Tatyana Shumsky 

Investors will get their first chance to size up a new finance chief at the world's largest gold producer this week, when Barrick Gold Corp. reports first-quarter earnings.

The Canadian miner is betting that Catherine Raw, who previously co-managed funds focused on the industry for BlackRock Inc., can streamline the company and place more emphasis on shareholder returns. She starts her new job following Tuesday's results and conference call.

Barrick Gold -- and the broader gold mining industry -- has lacked such a strategy, according to analysts and investors. The company and its peers have historically prized output over profitability, which contributed to ballooning costs, excessive gold production and disappointing returns.

"They spent too much on acquisitions. They spent too much to build huge projects that didn't generate enough returns or failed. The management have a legacy of doing a poor job guiding their companies," said Joe Foster, a fund manager at Van Eck Associates Corp. "Part of the reason that Catherine has the job that she does is that there's been a change in thinking at these companies," he said.

Ms. Raw, 34 years old, will be the company's fourth CFO in five years. She joined Barrick Gold a year ago to lead business performance. She played a key role in developing and executing the company's strategy, the company said.

Her ascent comes at a precarious moment for the company and the precious-metals industry at large.

Barrick Gold shares are down 78% since 2011 after several write-downs totaling $27 billion. That compares to $61 billion for the gold-mining industry as a whole over the same period, roughly 58% of its book value, according to Deutsche Bank.

"Having somebody in the company who has lived that from a professional standpoint can't be a bad thing from my point of view," said Joe Wickwire, who manages Fidelity's Gold Select fund, which owns Barrick Gold shares.

There are signs of a turnaround. Cost-cutting drove Barrick Gold's 2015 production costs to $831 an ounce, well below current gold prices of $1,230 an ounce.

Shares are up 119% this year, as of Friday's close, far outpacing the 16% rally in gold prices. The company slashed its debt by $3.1 billion in 2015 and plans to pay back another $2 billion in 2016.

Yet some are skeptical that Ms. Raw, is the right person for the job.

"We kind of find it puzzling that you would have somebody who has no prior CFO experience," said Dan Denbow, who manages $1.6 billion as a senior portfolio manager at USAA Investments. Finance chiefs have several areas of responsibility, such as managing bond financing, treasury planning and credit ratings, he said, not only a company's relationship with Wall Street analysts and investors.

A spokesman for Barrick Gold said Ms. Raw will be supported by the company's treasurer, vice president of finance and tax and controller, each of whom have spent a decade or more with the company in financial roles.

Barrick Gold's leadership team is primarily focused on allocating capital and managing talent, and Ms. Raw's past experience as a fund manager "makes her the ideal choice for CFO of Barrick," he said.

Analysts expect Barrick Gold to become profitable again this year, with net income forecast at $574 million, according to FactSet.

For the first quarter, earnings are expected at 13 cents per share, up from 8 cents a share in the same period of 2015.

But longer term, the test for Ms. Raw and Barrick Gold is whether the company delivers on its plan of becoming a smaller but more profitable company.

"If there's a choice between volume growth and profitability, heck yeah, you always take profitability," said Rick de los Reyes, a fund manager at T. Rowe Price, which holds Barrick shares.

While Ms. Raw was an unusual choice for CFO, "she was an investor, she knows what people care about and what they want to hear," he said.

Write to Tatyana Shumsky at tatyana.shumsky@wsj.com

(END) Dow Jones Newswires

April 25, 2016 02:48 ET (06:48 GMT)

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