Barrick Gold Corporation ( ABX ) is the world's largest pure gold mining company and is headquartered in Toronto, Ontario, Canada. The firm primarily operates in four regions - North America, South America, Australia Pacific and Africa. All four regions produce gold, while copper is produced from the South American mines. New mining and exploration projects in Papua New Guinea, USA, Canada, Australia, Peru, Chile, Russia, South Africa, Argentina and Tanzania are being undertaken by the company to expand production. Barrick Gold competes with other international gold producers like Newmont Mining ( NEM ), AngloGold Ashanti Ltd. ( AU ) and Goldcorp Inc. ( GG )
Launch of Coverage on Barrick Gold; $66.79 Price Estimate
We recently launched coverage on Barrick Gold with a $66.79 price estimate for the company's stock. Our number stands roughly 30% above market price.
We've broken down our analysis of Barrick Gold into three main business segments:
- Barrick Energy
The gold division is further divided into four main regional operating divisions, based upon Barrick Gold's reporting structure
- North American Mines
- South American Mines
- Australian Mines
- African Mines
The North American mines division is the largest single value driver for Barrick Gold. It accounts for 35-40% of the company's total gold shipments. South American mines account for 25-28% of the company's gold shipments, while Australian and African mines account for 22-27% and 8-10% respectively.
Gold as an Asset Class
The economic turmoil of 2008 and 2009 shifted the focus of investors to safer investment vehicles like gold, which is perceived to be a good investment during times of economic upheaval. While gold may not always have been the best performer, the past decade, particularly the past couple years, have made this commodity a special one for many investors. Gold ETF's and mutual funds are becoming increasingly popular.
Emerging countries like India and China have become two of the largest consumers of gold. Demand for gold in India nearly doubled during the first half of 2010 vs. 2009 levels. Expectations for 2010 further suggested 430 tons of gold consumed in China.
In the past, gold prices have trended well with rising inflation. The massive monetary easing that occurred during the financial crisis of 2008/2009 could spur inflation down the road, encouraging central banks to add to their gold reserves as a means of avoiding currency devaluation.