Peter Munk's retirement at Barrick Gold will mark end of an era

Barrick Gold chairman Peter Munk speaks at the company's annual general meeting in Toronto on Wednesday May 2, 2012. (THE CANADIAN PRESS/Chris Young)

When Peter Munk held the first annual meeting of the fledgling Barrick Gold three decades ago, he was the half-owner of a small mine in northern Ontario flogging his dream of becoming the world's biggest gold producer.

On Wednesday, when he steps down as chairman, it will be as a Canadian mining legend with more than a dozen mines around the world, a company worth some $22 billion, and with the satisfaction of turning his dream into reality.

The shareholder meeting will mark the end of an era and Munk's last address is expected to be emotional.

"It will be a bittersweet moment," said John Ing, chief executive of investment firm Maison Placements Canada, who has attended all but one of Barrick's annual meetings.

"Peter's deep down an emotional guy and it will be probably something that he's thinking about right now."

Ian Telfer, chairman of Goldcorp, remembers his first impression of Munk came when he attended a shareholder meeting in the 1980s.

"I saw him make this electrifying speech about gold and the future of gold and then, as part of that, he would talk about Barrick and what his plans were," Telfer said.

"I don't think there was anyone in the gold industry then, and I'm not sure there is now, that can get that kind of passion and energy into a room that Peter Munk could deliver."

Munk, now 86, started Barrick in 1983 and acquired a half-interest in Renabie, a gold mine near Wawa in northern Ontario. He would build the company into the largest gold miner by production with the acquisition of Placer Dome in 2006.

Ing said Munk was the first of a new breed of mining executive in Canada, not a mining engineer, but a dealmaker.

"It was Peter's arrival and retention and assembling of some very good mining teams that showed people, and investors in particular, that they didn't need to be a miner to be a success in the mining business," said Ing.

While Munk was the visionary for the company making the deals that helped Barrick grow, it was former Barrick president Bob Smith who operated the mines.

When Smith died in 1998, Munk paid tribute.

"Bob Smith was a giant of a human being and a kind of leader that I have never had the privilege of encountering before and I don't think ever will again," Munk said in praise of his business partner.

But Ing said while Smith was the mine operator, it was Munk that steered the company through a time of low gold prices through the 1980s and 1990s.

"He introduced hedging, which again the gold mining industry hated, but it meant that they could survive the downturn for the gold price," Ing said.

"Barrick was not only able to survive that, but make a number of acquisitions during that period."

Rob McEwen, chairman of McEwen Mining and former chief executive of Goldcorp, said Munk provided the model for how to grow a gold company and one he used to grow Goldcorp's Red Lake mine in Ontario.

"The rest of the industry would build a mine and leave it at that and it wouldn't change until they were almost running out of ore, and they'd have to start exploration again," he said.

McEwen said Munk brought an investor's perspective to the mining industry.

"It was a non-operator attitude toward mining. It was about an investor coming in and saying 'How do we maximize the value of this asset?'," he said.

Munk's life could be a Hollywood script.

He fled Hungary for Switzerland with his family to escape the Nazis before coming to Toronto where he graduated from the University of Toronto in electrical engineering.

His first venture was a hi-fi stereo company called Clairtone Sound Corp. that found initial success before eventually collapsing after a move to Nova Scotia.

Munk then built a chain of hotels in the South Pacific before returning to Canada and founding Barrick, first as a oil and gas company and then a gold miner.

He also established himself as a major real estate investor though Trizec Properties, which was sold to Brookfield Properties in 2006, and made a name for himself as an extraordinary philanthropist.

Munk founded the University of Toronto's Munk School of Global Affairs and the Peter Munk Cardiac Centre at Toronto General Hospital. He has also supported the Centre for Research, Innovation and Technology at Technion University in Israel and helped establish the Aurea Foundation to help support the study and development of public policy.

Telfer said Munk's exit is a loss for the Canadian mining industry.

"To me, Peter Munk's great asset for Canadian mining has been that he wanted to build a Canadian champion, he wanted to build a world class Canadian company and we have very few world class Canadian companies, unfortunately," he said.

But despite Munk's successes, Barrick has struggled in recent years and its stock trades for less than half what it did less than two years ago. Munk had hoped to retire in 2012, but remained with the company as it has wrestled with a number of issues.

The company has reported losses the past two years as it took US$6.3 billion in impairment charges in 2012 and another US$12.7 billion in last year.

Concerns also were raised about Barrick's debt levels, largely due to its ill-fated acquisition of copper miner Equinox Minerals in 2011, and it was forced to put its Pascua-Lama project in South America on hold last year after massive cost overruns and protests from an indigenous community living below the project. Their efforts to have Barrick's licence revoked and force a new environmental impact study was turned down by the Supreme Court of Chile but it put construction on hold until Barrick's environmental commitments and work to protect the water systems is completed.

As part of its plan to turn things around, Barrick is shedding what it deemed non-core operations, selling several smaller mines in Australia, a minority stake in another one in Nevada as well as a portion of its stake in African Barrick Gold, and raised nearly $3 billion in an stock offering that was used to repay debt.

The company also revamped its board and its executive compensation process after shareholders turned down an advisory vote on Barrick's approach to executive pay at its annual meeting last year.

And even as Munk's departure nears, reports suggest Barrick may be on the verge of its biggest deal yet -- a merger with one of it's biggest competitors - Newmont Gold in the U.S.

Long-speculated about, a merger would allow the companies to combine their operations in Nevada and save millions in overhead, supply contracts and staffing.

In an interview with Bloomberg TV, Munk said the companies have talked several times about deal over the years and that it has "always made sense," but this time could be different.

"For the first time in the last decade and a half, gold prices are heading down, not up, so synergies percentagewise are much more relevant than they were," he said.