On Jun 18, we issued an updated research report on
). The gold giant's cost management initiatives amid a weak metals
pricing environment are impressive.
Lower gold pricing dragged down Barrick's top and bottom lines in
first-quarter 2014, reported on Apr 30. Adjusted earnings beat the
Zacks Consensus Estimate while sales missed. The company backed its
gold production and cost guidance for 2014.
Barrick, a Zacks Rank #3 (Hold) stock, has a sound liquidity
position and generates healthy cash flows, which positions it well
to take advantage of attractive development, exploration and
Barrick is expected to benefit from its major exploration programs.
The company maintains a significant focus on Nevada for growth
opportunities. Over 50% of its exploration budget for 2014 has been
allocated to North America, mostly targeted for Nevada.
Barrick is also making significant progress with its cost and
efficiency improvement programs. The company witnessed progress in
its cost-controlling initiatives in the first quarter with all-in
sustaining costs declining by double gits year over year. Barrick
is targeting roughly $500 million in annual cost savings through
its cost-reduction and other company-wide initiatives.
However, a challenging gold pricing environment and still soft
economic conditions are concerns for Barrick. The company also has
a debt-laden balance sheet.
Moreover, uncertainties surrounding the Pascua-Lama project
continue to weigh on Barrick's prospects. The company, during
fourth-quarter 2013, temporarily halted construction activities at
the Pascua-Lama mine. The decision to restart the project will
depend on certain factors including the metal prices outlook.
Barrick expects to spend roughly $300 million on account of
ramp-down and other expenses related to the mine in 2014.
Other Stocks to Consider
Other companies in the gold mining space worth considering include
Agnico Eagle Mines Limited
Alamos Gold Inc.
Pretium Resources Inc.
). While Agnico Eagle carries a Zacks Rank #1 (Strong Buy), both
Alamos Gold and Pretium Resources retain a Zacks Rank #2 (Buy).
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