Barrick Gold Corporation (ABX): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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 management initiatives.

Overview:

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 projects.

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.


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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.



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