We are reaffirming our Neutral recommendation on Barrick Gold.
Profit for the third quarter slid on weak metals pricing and losses
associated with derivatives and currency swings. Adjusted earnings
beat the Zacks Consensus Estimate. Sales fell by double-digits and
missed expectations. The company reduced its cost outlook for 2014
and narrowed its gold production forecast for the year. Weak gold
pricing and challenging economic conditions are concerns for
Barrick, along with the limited supply of gold as new deposits.
Moreover, uncertainties surrounding the Pascua-Lama project
continue to weigh on Barrick's share price. However, the company
has a strong cash flow profile, enabling it to invest in attractive
expansion opportunities. We are also encouraged by its cost
Barrick Gold Corporation (ABX) is the largest gold mining
company in the world, with headquarters in Toronto, Ontario,
Canada. The company has many advanced exploration and development
projects located across five continents.
Barrick had 104.1 million ounces (oz) of proven and probable
gold reserves and 14 billion pounds of copper reserves at the end
of 2013. Barrick is placed amongst the top gold producers with
peers, such as Newmont Mining (based in U.S.) and AngloGold Ashanti
(based in South Africa). In 2013, 56% of Barrick's gold production
came from North America, 12% from North America - Other, 25% from
Australia Pacific and 7% from Africa. Barrick produced 7.17 million
ounces of gold and 539 million pounds of copper in 2013.
The company's strategy to create value for its shareholders is
focused on five key areas:
Maximizing the benefits of rising metal prices by meeting
operational and financial targets.
Increasing gold and copper reserves and production through
exploration and selective acquisitions.
Maximizing the value of its existing mines and properties by
leveraging its expertise and regional infrastructure.
Growing production by investing in and developing high return
Continuing to improve corporate social responsibility practices
to maintain and strengthen its incense to operate.
By executing on this strategy, the company expects to increase
earnings and cash flow on a per share basis and enhance its
shareholders' leverage to metal prices.
Barrick Gold Corporation (ABX): Read the Full
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