Company Reports

No-moat Barrick Gold’s 2024 first-quarter attributable sales of about 910,000 ounces were down 5% from the same quarter of 2023 and 13% from the prior quarter, driven by seasonal maintenance and mine plan sequencing. However, they were broadly in line with our expectations and guidance, which the company reiterated. We expect sales to increase over the remainder of 2024, assisted by the 60%-owned Pueblo Viejo and 25%-owned Porgera mines ramping up, and continue to forecast 2024 sales of 4.0 million-4.1 million ounces, similar to 2023. While the lower sales drove a 7% increase in unit cash costs, 9% higher gold prices meant adjusted earnings per share rose 36% on last year, to USD 0.19. We forecast 2024 EPS of USD 0.94, about 12% higher than 2023, driven by higher gold prices.

Barrick Gold is the world’s second-largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs thanks to the proximity of mines owned by the joint venture.

Commodity prices diverged in the quarter. Despite solid China steel production, iron ore and metallurgical coal prices are down, while copper rose on supply issues and hopes of faster global growth. However, prices are elevated compared with history and cost-curve support.

Iron ore prices are lower on concerns over China steel demand due to its struggling property market and weak infrastructure spending. However, gold prices are up on optimism over peak interest rates, driving a 2% rise in our estimate for no-moat Newmont, to USD 51. It remains the cheapest miner we cover, trading 27% below fair value.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

Demand growth from China has been the main driver of rising commodity prices in the past two decades. More recently, though, most commodity prices have fallen from highs set with Russia’s invasion of Ukraine, the subsequent sanctions on Russia, and the rerouting of supply chains. Prices, nevertheless, are generally elevated versus the 20-year average, as well as relative to cost support.

No-moat Barrick Gold’s 2023 result was in line with our expectations. Despite this, we modestly lower our fair value estimate to USD 21 per share, down from USD 21.50. Barrick guided to lower 2024 gold production as well as increased unit cash costs, driven by lower output at the Nevada Gold Mines and Pueblo Viejo joint ventures with Newmont. We now forecast 2024 gold sales of 4.0 million to 4.1 million ounces, similar to 2023 but down from 4.4 million to 4.5 million previously. We also expect increased unit cash costs of about USD 1,010 per ounce, up from USD 900. We still forecast gold sales rising to around 4.6 million ounces in 2028, driven by increased production at Barrick’s joint ventures with Newmont.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

Near-term iron ore prices are higher on strong China steel production. Gold prices are up on optimism over peak interest rates, driving a 2% rise in our estimate for no-moat Newmont, to USD 54. It is the cheapest we cover, trading 30% below fair value.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

Commodity prices diverged in the quarter with strong China steel production driving iron ore and metallurgical coal prices up, while base metals prices dropped on worries of a Western recession. Even so, prices are elevated versus history and cost-curve support.

We retain our fair value estimate of USD 21 per share for no-moat Barrick Gold after its 2023 third-quarter result met our expectations. Adjusted EBITDA of USD 1.46 billion rose 27% on the third quarter of 2022, driven by higher gold prices and sales volumes, partially offset by increased unit cash costs. The balance sheet remains strong, with minimal net debt of about USD 510 million. It will pay a USD 0.10 (CAD 0.137) per share dividend in December, half that paid last year but in line with its dividend policy. We forecast total 2023 dividends of USD 0.40 (CAD 0.548) for a 2.5% forward yield at current share prices. Barrick targets a quarterly base dividend of USD 0.10 per share, with additional dividends potentially payable if it has net cash on the balance sheet. We think this is a reasonable approach. Though as its shares trade at around a 24% discount to fair value, we think share repurchases would be a better use of surplus funds. We think the discount to fair value is likely due to concerns over rising real interest rates, which are a headwind to gold prices.

Strong China steel production is supporting prices for steel inputs despite recession concerns. Otherwise, changes to our commodity price assumptions are mixed, led by higher near-term iron ore prices and lower near-term thermal coal prices. We think thermal coal miner Whitehaven Coal and minerals sands miner Iluka are the cheapest we cover. Both trade at 29% discounts to our AUD 9.50 and AUD 10.50 per share fair value estimates, respectively, with Whitehaven’s down 3% on lower near-term thermal coal prices, partially offset by a weaker Australian dollar. Peer New Hope is also down 3% to AUD 6.10 per share. Iluka’s estimate is unchanged, with a weaker Australian dollar offsetting lower synthetic rutile prices.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

Commodity prices have generally stabilized after falling on concerns that China’s reopening would underwhelm, along with worries over a recession in the West. Even so, they remain elevated versus history and cost-curve support. The Russian invasion of Ukraine and subsequent sanctions on Russia support energy prices and reinforce the importance of energy security.

No-moat Barrick Gold’s 2023 second-quarter result was lower than our expectations. Adjusted NPAT of about USD 340 million or USD 0.19 (CAD 0.25) per share was around 20% below the second quarter of 2022 but 36% higher than the previous quarter. Adjusted EBITDA of about USD 1.4 billion fell 10% on last year, driven by lower gold sales and higher unit cash costs, partially offset by higher gold prices. Nevertheless, gold sales improved on the prior quarter, and we think sales likely continue to improve over the remainder of 2023, driven by increased production at Barrick's 61.5%-owned Nevada Gold Mines, or NGM, and 60%-owned Pueblo Viejo joint ventures with Newmont. Increased sales will, in turn, likely lower unit cash costs and improve margins, in our view. However, we think it unlikely that an improved second half will fully make up for lower-than-expected first-half sales and modestly lower forecast 2023 attributable gold sales to about 4.2 million ounces, down from roughly 4.3 million. Our forecast unit cash costs for 2023 rise accordingly, to about USD 890 per ounce, up from USD 870 previously.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.

No-moat Barrick reported a soft first quarter of 2023 but one nevertheless in line with our expectations. Adjusted net income was about USD 250 million, or USD 0.14 per share, roughly halving compared with the first quarter of 2022. Adjusted EBITDA of about USD 1.2 billion fell 28% on last year, driven by lower gold sales and higher unit cash costs due to inflation. Total gold sales fell 4%, to roughly 950,000 ounces. Lower production at Barrick’s 62%-owned Nevada Gold Mines, or NGM, and 60%-owned Pueblo Viejo joint ventures with Newmont were the main drivers, due to planned maintenance and the ramp up of the Pueblo Viejo expansion project, respectively. While Barrick’s averaged realised gold price of about USD 1,900 per ounce was similar to last year, lower production and inflation contributed to higher unit cash costs, which rose about 20% to roughly USD 990 per ounce. Barrick’s copper business was also weak, with copper sales of roughly 40,000 metric tons down around 20%. Along with a 10% lower average realised copper price of about USD 9,260 per metric ton, this also contributed to lower margins. However, copper remains a relatively minor contributor, accounting for about 15% of our forecast 2023 EBITDA.

Barrick Gold is the world’s second largest gold miner by production, operating mines in 19 countries in the Americas, Africa, the Middle East, and Asia. Its large portfolio of mines is a result of the 2019 acquisition of Randgold and the combination of its crown jewel Nevada assets with Newmont in a joint venture called Nevada Gold Mines, or NGM, that same year. With Barrick the operator and owning 61.5% of the partnership, NGM has been able to reduce costs given the proximity of mines owned by the joint venture.