...Introduction Managing the risk of changing prices of gold is central to the business strategy of American Barrick Resources Corp., one of North America's largest and most successful gold-mining firms. The case contrasts this firm's hedging policies with those of its rivals that do not hedge and details the wide range of hedging products (gold loans, forwards, options, and spot deferred contracts) used to manage price risk. In 1992 the management of American Barrick is pleasantly surprised by unexpected new gold finds, but this new production places demands on the firm's hedging program and tests the firm's commitment to hedging when prices of gold and of many hedging vehicles are unattractive. The gold mining industry has been heavily impacted by the fluctuating gold prices and continuously rising operating costs. Hedging gold prices has become important to ensure financial stability in a sector where mines are unprofitable due to high volatility. Through this case we question the value created by hedging and analyse various instruments to decide upon the best available instrument to Barrick. In this document we explore: 1. Popular theories of hedging and focus on hedging in the gold industry. 2. Analyse features and risk of the gold hedging program at Barrick. 3. Analyse characteristics of Barrick’s gold hedging program. In this document we conclude that value of hedging gold prices creates value for shareholders especially when other firms remain exposed. ...
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...Barrack Gold Corporation Introduction The following essay focuses on the mining conglomerate Barrick Gold Corporation. Barrick owns gold and copper mines across Australia, Africa, and the Americas and these geographical locations provide the focus of the essay’s Macroenviromental analysis. The gold is sold to various gold bullion dealers at market prices whereas copper is sold to copper product manufacturers and copper traders in Europe, North America, South America and Asia (BarrickResponsibilty, 2013). Barrick’s Macroenviroment According to Kotler et al. (2011) a company and all of the other actors operate in a larger macroenviroment of forces that shape opportunities and pose threats to a company such as Barrick. Jobber and Ellis-Chadwick (2013) further imply that it is these actors and forces that affect the mining company’s capability to operate effectively in providing products and services to its customers. Its external environment is characterized by elements that do not have an immediate impact on its performance albeit their impact being felt over the long term. There are those that can influence the company marketing activities without management being able to control them hence the need to continuously monitor them or risk going out of business (Wilson, 2006). The framework that best discusses these elements is the PESTLE Analysis as it provides the strategic planning and environmental analysis that can be useful for Barrick to improve performance and ensure its...
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...Canadian mining- Impact of cost inflation and volatility and the road ahead Introduction With a 9.8% share of Canada’s GDP, the mining sector is critical to the future of the Canadian economy (Deloitte Report). Unfortunately, rising cost inflation, unprecedented volatility in commodity and energy prices and a strong Canadian dollar have negatively impacted the performance of this sector over the last year. This report seeks to uncover the drivers behind cost inflation and evaluate the hedging strategies utilized by Canadian companies to mitigate volatility through a case study of Barrick Gold. We will also examine the impact of tightening margins on the capital expenditure decisions of this company. Part 1: Cost Inflation Cost inflation in the mining industry has been driven by increases in both Operational expenses and Capital expenditures. Operational expenses have been driven by three factors 1) Wage Increases 2) Energy Costs and 3) Supply cost increases. Wages in this industry have increased dramatically over the past 10 years and the Canadian mining industry now boasts the highest wages of all industrial sectors in Canada. The average weekly pay for a mining worker in 2011 was $1,436, which surpassed the earnings of workers in forestry, manufacturing, finance and construction by 47%, 46%, 35% and 32% respectively (DELOITTE REPORT) Source: Mining Association of Canada – 2012 Facts & Figures Report http://www.mining.ca/www/media_lib/MAC_Documents/P...
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...is one of the most important trends in this day and age. The business activities of multinational corporations (MNCs) are becoming increasingly crucial to the world’s economy. Barrick Gold Corp., a leading Canadian corporate citizen and the world’s top gold producer, currently operating 26 mines worldwide, was the subject of much discussion in September 2011. It has been confronted with many ethical problems raised by globalization, such criticism are the accusation that it operates in violation of human rights and environmental standards. Because most of Barrick’s gold mines are located in the less developed countries, issues such as human rights, violence by security guards, environmental pollution, sexual assault happened. It is a very complex problem to deal with ethics in different area. Ethics will inevitably be susceptible to attack under the global scenario by different countries, cultures, social-economic conditions, value systems and moral standards. Thus, MNCs are considered responsible for their affiliates and subsidiaries’ activities as they have powerful influence over them. There are 4 levels of corporate social responsibility, based on Carroll’s Pyramid of Corporate Social Responsibility. At the grass roots is the economic level, which requires that the corporation be profitable. Barrick is doing great on this level as it is the most profitable firm among the Canadian extractive Industries and has evidenced a pattern of expanding quickly. The second level is the...
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...Writing Assignment one: Barrick Gold and Mine Course: 04-71-100-02 Instructor: Professor Ramsay Student name: Jiaxiong Liang Date submitted: 10/01/13/ Barrick Gold and Mine This article is meant to points out the two main communication problems of the mining project and provide solutions using the communication model. The two main communication problems are environmental worries from local residents and the injunctions from local government. If cannot be solved on time, they may cause severe resentment from local residents, huge loss of profit, decrease of stock price, or even disinvestment from investors. The causes of these problems are various. For the first problem, using the wrong communication skills while communicating with local people and a lack of communication are crucial among all. It built a wall between themselves and the local people which accelerate the accumulation of resentment. As for the other one, belatedly feedback and misinterpretation are keys. Before all problems occurred there always will be some symptoms show up. For problem from locals, symptoms might be: low efficiency of local employees, negative news form local media, or even demonstrations. For problem from local government: more frequently official procuratorial works on mining waste treatment, or a sudden increase of restrictions from government. There are two main stakeholders of this case will be locals and...
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...04-71-300-02 Professor Singh Date submitted: March 19th, 2014 ! ! ! ! ! ! ! ! ! ! ! ! ! !1 Executive Summary This report assesses the global mining industry from a business perspective. Firstly, it begins with the history of mining across the globe and the structure of the mining industry. It then analyzes the impacts of the mining industry globally. Lastly, it addresses the issues surrounding our land—the Canadian mining industry. The research shows that the history of mining goes as far as the Neolithic era. The mining value chain presented demonstrates the formation of a mining company to the extraction of the natural resources. Further investigation shows that the mining structure is an oligopoly. Methods of analysis include an environmental analysis using PEST and a stakeholder map, which focus on the performance of a world-renowned mining company TransAlta. The finding is that management’s role is to have efficiency and productivity while maintaining ethical practices. Ethical theories are then used to look at the social, environmental and economical impacts of the Canadian industry. It is concluded that each ethical theory presents a favorable solution to each impact. Social corporate responsibility is evaluated in the last ten years in Canada and around the globe. It is found that the industry has become one of the most safety-conscious industries within Canada. The companies still have a prospective future as technological advancements, a major key to a sustainable...
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...FI 8320, Spring 2005 Cases and Readings in Corporate Finance [pic] [pic] [pic] [pic] Instructor Professor David C. Nachman Office: RCB 1239 Phone: 651-1696 email: dnachman@gsu.edu Office Hours: W 10:00 am – 2:00 pm, or by appointment Prerequisites FI 8000 CSP: 1, 2, 6 Course Description This course focuses on financial policy-making through case analyses, contemporary readings from the professional literature, and problem solving. The emphasis in the course is on investment and financing decisions and their impact on firm value and on capital market imperfections and their impact on the raising of corporate capital. The course also provides an opportunity for the study of additional topics of special current significance such as capital structure and dividend policy, corporate restructuring and the market for corporate control, real options, risk management, international capital budgeting and financing, financial planning and working capital management, project financing, reorganizations and advanced equity valuation. Course Material Required text material • (BMA) R. A. Brealey, S. C. Myers and F. Allen, Principles of Corporate Finance, 8th ed., McGraw- Hill/Irwin, Inc., 2006. •(RP) Reading Packet •(CP) Case Packet The required text (BMA) and the materials that make up the Case Packet (CP) are available at the GSU Book Store. The Reading Packet (RP) is available at ERes. Contents of (CP) and (RP) (with ERes access instructions) follow...
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...FI 4320, Spring 2005 Cases and Readings in Corporate Finance [pic] [pic] [pic] [pic] Instructor Professor David C. Nachman Office: RCB 1239 Phone: 651-1696 email: dnachman@gsu.edu Office Hours: W 10:00 am – 2:00 pm, or by appointment Prerequisites FI 4000 CSP: 1, 2, 4, 6 Course Description This course focuses on financial policy-making through case analyses, contemporary readings from the professional literature, and problem solving. The emphasis in the course is on investment and financing decisions and their impact on firm value and on capital market imperfections and their impact on the raising of corporate capital. The course also provides an opportunity for the study of additional topics of special current significance such as capital structure and dividend policy, corporate restructuring and the market for corporate control, real options, risk management, international capital budgeting and financing, financial planning and working capital management, project financing, reorganizations and advanced equity valuation. Course Material Required text material • (BMA) R. A. Brealey, S. C. Myers and F. Allen, Principles of Corporate Finance, 8th ed., McGraw- Hill/Irwin, Inc., 2006. •(RP) Reading Packet •(CP) Case Packet The required text (BMA) and the materials that make up the Case Packet (CP) are available at the GSU Book Store. The Reading Packet (RP) is available at ERes. Contents of (CP) and (RP) (with ERes access instructions)...
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...the iron ore market, major risks associated with this project, estimated project NPV, and the benefits of the financing packages. From our analysis, the NPV of this project is $137.36M - $104.31M. While there is risk associated with venturing into an unfamiliar market in a politically volatile country, the debt financing packages mitigate this risk. Thus, we believe that the project should be accepted. FINANCIAL CONDITION We experienced growth in earnings from $98M in 2002 to $1.84B in 2011, due to improved operating margins (Appendix 1). The improvements in ROE and ROA have outpaced our competitors, implying that we are getting higher returns for each dollar invested in shareholder’s equity and assets. Although we have a more aggressive debt strategy, our D/E ratio never exceeded 50% from 2002 to 2011. Despite the slight 4% decrease in our cash and current ratios, their values are still well above one. We are still in a good financial position as we have accumulated a lot of cash and our debt is being used effectively to take advantage of investment opportunities. Therefore, we are in an excellent position to take on new projects. NEW INVESTMENT OPPORTUNITY AND ASSOCIATED RISKS The iron ore investment in South Africa is an attractive opportunity since it allows us to diversify our operations and lessen our dependence on unsustainable gold prices. With the price of iron increasing and high demand for the commodity, entering...
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...Stock Trak-Report Investment Analysis I Executive Summary This report will describe examine the various strategies that were undertaken to successfully complete the Stocktrak simulation. Firstly, an analysis of the US and Chinese markets will be given as they are crucial markets that play a big role in the worldwide economy. Due to the fact that the US economy has been going through a recession, a working knowledge of this economic was crucial to our success. Our initial strategy revolved around timing trades based on daily market performance and expectations using daily market news and reports. While this strategy was successful to an extent, our group soon focused on diversifying our portfolio, not just through the quantity of equity held, but also by using correlations between firms. Our group began investing in many technology firms as well as some communications firms and futures. An industry analysis of these industries will be given as most of our stocks were held in these areas. Since there are technological advances almost daily, we felt the technology industry could be very promising. The automotive industry was also important due to Toyota’s recall and we quickly learned just how volatile the futures market could be. Portfolio statistics will also be given and a comparison of the NASDAQ Composite Index and our portfolio will be given. In the end, our final strategy consisted of diversifying our portfolio, using daily market news and expectations and by paying...
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...www.pwc.co.uk The direct economic impact of gold October 2013 www.pwc.co.uk The work carried out by PricewaterhouseCoopers LLP ("PwC") in relation to this report has been carried out only for the World Gold Council and solely for the purpose and on the terms agreed between PwC and the World Gold Council. The report does not constitute professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this report and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences to anyone acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it. © 2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. The direct economic impact of gold Contents Foreword ........................................................................................................................................................................1 Executive summary ...........................................................................................................................................
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...Business risks facing mining and metals 2012–2013 Organizations that succeed do so because they are best able to optimize the risk and reward equation for both strategic and operational issues. Contents The Ernst & Young business risk radar for mining and metals Executive summary The top 10 business risks 1. Resource nationalism 2. Skills shortage 3. Infrastructure access 4. Cost inflation 5. Capital project execution 6. Social license to operate Editorial — Prospects and perils: facing up to political risks in mining and metals 7. Price and currency volatility 8. Capital management and access 9. Sharing the benefits 10. Fraud and corruption 3 4 10 11 14 17 20 23 26 28 32 35 38 40 Under the radar Getting prepared 42 46 The Ernst & Young business risk radar for mining and metals Up from 2011 Down from 2011 Same as 2011 New entry The risks closest to the center of the radar are those that pose the greatest challenges to the mining and metals sector in 2012 and into 2013. The business risk report Mining and metals 2012–2013 3 Executive summary 4 The business risk report Mining and metals 2012–2013 A more complex and extreme risk environment “The bottom line is that if returns start to wane, then there is a greater imperative for organizations to tightly and more effectively manage their risks to maintain an adequate risk/reward balance.” Mike Elliott Global Mining and Metals Leader, Ernst & Young On the surface, the top...
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...MOTIVATION, BEHAVIOR, AND PERFORMANCE IN THE WORKPLACE I. INTRODUCTION Motivation is a subject that has long interested researchers and practitioners seeking to understand human behavior and performance. Over the course of the 20th century and into the new millennium, scholars have developed sweeping theories and have amassed large bodies of applied research investigating motivation across a variety of settings. Motivation has been studied in schools, the workplace, government, and athletic competitions, to name but a few contexts. It has been studied at the level of the individual, the group, and the organization. Some motivation researchers have employed cognitive models, which emphasize the role of thought processes in determining motivation and behavior, while other researchers have adopted non-cognitive paradigms, which focus on factors such as personality traits, affective states, and environmental determinants. This paper focuses specifically on research about motivation and behavior in the workplace. It discusses motivation theory, which has broad applicability across contexts, as well as the empirical research conducted in workplace contexts. In reviewing this literature, particular emphasis is placed on research about motivation and behavior as they relate to individual performance. A central aim of motivation research is to explicate the complex relationships that exist among motivation, behavior, and performance—such knowledge is critical for managers tasked with...
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...Insights for Student Success in Higher Education Charles Kurose September 2013 MOTIVATION, BEHAVIOR, AND PERFORMANCE IN THE WORKPLACE I. INTRODUCTION Motivation is a subject that has long interested researchers and practitioners seeking to understand human behavior and performance. Over the course of the 20th century and into the new millennium, scholars have developed sweeping theories and have amassed large bodies of applied research investigating motivation across a variety of settings. Motivation has been studied in schools, the workplace, government, and athletic competitions, to name but a few contexts. It has been studied at the level of the individual, the group, and the organization. Some motivation researchers have employed cognitive models, which emphasize the role of thought processes in determining motivation and behavior, while other researchers have adopted non-cognitive paradigms, which focus on factors such as personality traits, affective states, and environmental determinants. This paper focuses specifically on research about motivation and behavior in the workplace. It discusses motivation theory, which has broad applicability across contexts, as well as the empirical research conducted in workplace contexts. In reviewing this literature, particular emphasis is placed on research about motivation and behavior as they relate to individual performance. A central aim of motivation research is to explicate the complex relationships that exist among motivation...
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...Mining Industry Case Analysis | Business Ethics in a Global Context | Presented To: Dr. Jang Singh | | | | Executive Summary This report will examine the Mining Industry via ethical perspectives. This report includes a brief overview of the industry followed by an evaluation of the Mining industry’s value chain; including an environmental analysis of a mining company, as well as an evaluation of the industry’s corporate social responsibility, corporate social responsiveness and finally the corporate social performance. The Mining Industry is one of the World’s largest industries. The ‘idea’ of mining dates back to the beginning stage of civilization. Some examples of early mining can be found in Egypt, Europe and the Philippines. As of now, top mining countries are South Africa, Russia, Australia, Ukraine and Guinea. This industry faces constant technology advancement, consequently it is an expensive investment, with large profit. The Mining Industry can be controversial when looked through an ethical lens. This Industry is analysed through four perspectives. * The utilitarianism perspective, an act is morally right if the outcome benefits the greatest amount of people; * The rights perspective, basically, important entitlements that should be respected and protected in every action; * The justice perspective, fair treatment of individuals in a situation where everyone is involved and gets what they deserve to; * The virtue perspective, morally...
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