We are retaining our Neutral recommendation on Barrick Gold. Lower
metal pricing coupled with higher tax and interest expenses dragged
down its profit in the third quarter. However, adjusted earnings
beat the Zacks Consensus Estimate. Revenues fell year over year,
but also beat expectations. While the company lowered its gold
production guidance for 2013, it raised its copper production
outlook. Weak gold pricing and challenging economic conditions are
concerns for Barrick, along with the limited supply of gold as new
deposits. Moreover, the recent move to temporarily suspend the
Pascua-Lama project represents a setback for the company. However,
Barrick has a strong cash flow profile, enabling it to invest in
attractive expansion opportunities. We are also encouraged by its
cost management initiatives.
Barrick Gold Corporation (ABX) is the largest gold mining
company in the world, with headquarters in Toronto, Ontario,
Canada. The company has a portfolio of 26 operating mines with many
advanced exploration and development projects located across five
The company also has the largest reserves in the industry with
140.2 million ounces (oz) of proven and probable gold reserves and
13.9 billion pounds of copper reserves at the end of 2012. 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 2012, 47% of Barrick's gold production came from
North America, 22% from South America, 25% from Australia Pacific
and 6% from Africa.
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
BARRICK GOLD CP (ABX): Free Stock Analysis
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