Surprisingly, Barrick Gold (GOLD 1.64%) recently announced that its CEO Jamie Sokalsky will step down on September 15. What's more, no new CEO will be appointed, and the company will proceed with a new operating structure with two co-presidents, Kelvin Dushinsky and Jim Gowans. Jamie Sokalsky was leading the recent transformation in Barrick Gold, including cost-cutting, portfolio optimization, and dealing with debt. The change in leadership means there could be big changes ahead.

Back to merger with Newmont Mining?
Jamie Sokalsky was clearly pushing Barrick Gold toward becoming a much leaner company. Only this year, the company divested Kanowna in Australia, Marigold in Nevada, sold part of African Barrick Gold, and half of its Jabal Sayid copper mine in Saudi Arabia. The results of portfolio optimization and cost cutting were evident when the company reported its first-quarter results. In just a year, Barrick Gold was able to lower its all-in sustaining costs (AISC) from $919 per ounce to $833 per ounce. Notably, its peer Goldcorp (GG) achieved even more impressive cost cuts. Goldcorp pushed AISC from $1,135 per ounce in the first quarter of 2013 to $840 per ounce in the first quarter of 2014.

This April, Barrick Gold held merger talks with Newmont Mining (NEM 0.67%). The talks ended without success, and both companies blamed each other for spoiling the deal. Interestingly, the merger with Newmont Mining did not fit into the proclaimed "lean Barrick" strategy, as the merger would have created a gigantic gold miner. One could only speculate at this point, but current CEO could have been against this move, given the strategy that he previously followed.

With the absence of the CEO, chairman John Thornton will lead the team. Thornton has already stated that Barrick was open to a merger with Newmont Mining, but added that the companies were not talking about it and that the merger was not on the agenda for Barrick. Interestingly, a recent Wall Street Journal report stated that Newmont Mining was feeling pressure from shareholders to return to merger talks with Barrick Gold. Now, the road looks open for this deal.

New strategy yet to be presented
Until now, it was fairly easy to say what Barrick Gold intended to do. The company routinely sold non-core assets, pushed costs down, and worked to return to positive free cash flow. Positive free cash flow is a very important target for a company, whose debt stood at almost $13 billion at the end of the first quarter. Barrick Gold already used a big equity offering in November last year, so generating as much cash as possible is the best way to push debt down.

Barrick's possible merger with Newmont Mining could lead to a creation of a spinoff company. When April merger talks failed, the composition of a spinoff was highlighted as one of problem points in talks. The future of Barrick's giant Pascua-Lama project is also of big interest. Given current gold prices, the company cannot decrease its indebtedness and at the same time continue developing Pascua-Lama on its own. Newmont Mining's stalled Conga project is in an even worse state than Pascua-Lama. How a possible new company with two stalled giant projects will deal with their financing remains a big question.

Bottom line
Despite Barrick's chairman cautious commentary on the possible merger, It looks like the company could return to negotiations with Newmont Mining. The previously stated synergies on Barrick's and Newmont's operations in Nevada are the only presented positive of such deal. Hopefully, Barrick will hint at its new strategy when it presents its second quarter report on July 30. However, I would not count on much detail on a possible merger with Newmont Mining. Last quarter, management of both companies refused to answer merger-related questions when they presented their first-quarter results. Chances are they will act the same again.