Barrick Earns 70% Interest in Spring Valley Project - Analyst Blog


Barrick Gold Corporation ( ABX ) informed Midway Gold Corp. ( MDW ) that it has made $38 million of expenditures on the Spring Valley project in Nevada. This entitles Barrick to earn a 70% interest in the project. Spring Valley is a large, porphyry-hosted gold system, which is a mineable open pit.

Barrick made the expenditures a year ahead of the scheduled requirements in the earn-in agreement. Midway, on the other hand, will evaluate its option to retain a 30% interest in the project along with Barrick, or dilute to a 25% interest in exchange for a full carry to production.

Midway Gold, an emerging gold producer, is on track to launch its first million-ounce project in 2014. The company's core assets are focused in Nevada, a prolific gold producer and a stable mining jurisdiction. Barrick is the world's largest gold producer and operates mines and advanced exploration and development projects in four continents with large land positions on some prolific and prospective mineral trends.

Barrick recently released its third-quarter 2013 results. The company's adjusted earnings (excluding one-time items) fell to 58 cents per share in the quarter from 88 cents in the year-ago quarter, but surpassed the Zacks Consensus Estimate of 50 cents.

On a reported basis, net earnings were $172 million or 17 cents per share, a roughly 73% decline from $649 million or 65 cents a share registered in the year-ago quarter. Lower realized gold and copper prices, higher interest expense and higher income tax expense led to the decrease in earnings.

Revenues dropped around 12% year over year to $2,985 million in the reported quarter but exceeded the Zacks Consensus Estimate of $2,973 million. Average realized price of gold decreased 20% year over year to $1,323 per ounce.

Gold production rose to 1.85 million ounces in the quarter from 1.78 million ounces a year ago. Copper production increased to 139 million pounds from 112 million pounds in the prior-year quarter.

Currently, Barrick carries a Zacks Rank #3 (Hold).

Other companies in the gold mining industry with favorable Zacks Rank are Lake Shore Gold Corp. ( LSG ) and Pretium Resources Inc. ( PVG ). Both hold a Zacks Rank #2 (Buy).

BARRICK GOLD CP (ABX): Free Stock Analysis Report

LAKE SHORE GOLD (LSG): Free Stock Analysis Report

PRETIUM RES INC (PVG): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ABX , LSG , MDW , PVG

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