Barrick Gold Earnings: All You Need To Know

| About: Barrick Gold (ABX)

Summary

Barrick released its 4Q'15 and full year 2015 on February 17, 2016. The company gave also 2016 guidance. Revenue was $2.238 billion, down 3% quarter over quarter.

Total debt was $12.748 billion end of 2014 and was $9.765 billion end of 2015. ABX generated $471 million in positive free cash flow ("FCF") in 2015.

The company is now again a good stock from a long investment perspective, in my view. I recommend to add on any weakness.

Barrick Gold Corp. (NYSE:ABX)

Image: Barrick Gold.

This article is an update of my recent article on Barrick Gold published on January 24,2016 about the preliminary production for 4Q'15 and full year 2015.

Quick Presentation:

Barrick Gold is a Canadian senior gold and copper miner.

The company holds interests in several producing gold mines, which are located in North America, South America, and Australia Pacific; producing copper mines situated in Chile and Zambia; and a mine under construction is in Saudi Arabia.

Link: Company Website.

Company last presentation on Feb. 18, 2016.

Gold Production per mine for 2015:

Mine Total 2015

4Q'15

K Oz

3Q'15

K Oz

2Q'15

K Oz

1Q'15

K Oz

Gold strike 1,093 352 328 206 207
Cortez 959 312 321 193 133
Pueble Viejo 572 134 172 131 135
Lagunas Norte 560 119 108 155 178
Veladero 602 159 143 151 149
Turquoise Ridge 217 61 55 52 49
Porgera 436 66 134 118 118
Kalgoolie 320 83 97 81 59
Acacia 468 129 104 119 116
Other Mines* 880 204 201 231 244
Others 10 0 0 8 2
Total 6,117 1,619 1,663 1,445 1,390
Price of gold per Oz 1,160 1,105 1,124 1,192 1,219
Price of copper per Lbs 2.44 2.16 2.39 2.66 2.55
AISC gold 830-870 840~ 793 895 927
Click to enlarge

* Other mines: Hemlo, Round Mountain, Bold Mountain, Golden sunlight, Pierena, Ruby hill.

Barrick Gold production graph snapshot:

Over the next three years, our production is expected to be in the range of 4.6 million ounces to 5.5 million ounces of gold at progressively lower all-in sustaining costs. And as I noted, our objective is to improve upon this over time, with the aim of achieving an all-in sustaining cost below $700 per ounce by 2019. M. Dushnisky said in the conference call.

Barrick Gold Financial snapshot (5 consecutive quarters):

2015 Q4 2015 Q3 2015 Q2 2015 Q1 2015 2014 Q4 2014

Shares Outstanding billion

1.165 1.165 1.165 1.165 1.165 1.165 1.165
Revenue in $ Billion 9.029 2.238 2.315 2.231 2.245 10.239 2.510

Gold production

M Oz

6.117 1.619 1.663 1.445 1.390 6.249 1.527
Copper production in M lbs 511 138 140 115 118 436 134
All-in sustaining cash cost gold AISC/copper $/Oz

831

2.33

733

2.15

793 895 927

864

2.79

925

2.40

Realized gold price

$/ Oz

1,160 1,106 1,124 1,192 1,219 1,266 1,201

Realized copper price spot

$/ lbs

2.37 2.16 2.39 2.66 2.55 3.03 2.91

Net income

In $ million

(2,838) (2,622) (264) (9) 57 (2,907) (2,851)

Net earnings per share

in $

(2.44) (2.25) (0.23) (0.01) 0.05 (2.50) (2.45)

Adjusted net income

In $ million

344 91 131 60 62 793 174

Adjusted net earnings per share

In $/sh

0.30 0.08 0.11 0.05 0.05 0.68 0.15

Operating cash flow

$ million

2,794 698 1,255 525 316 2,296 371

Total debt

in $B

9.765 9.765 11.283 12.361 12.605 12.748 12.748
Dividend per share $ 0.11 0.02 0.02 0.02 0.05 0.20 0.05

Impairment charges

$ million

3,897 3,407 450 35 5 4,106 3.564

Adj. EBITDA

in $ million

3,187 722 490 690 1,285 3,811 755

Cash and Cash equivalent in $ Billion

2.455 2.455 3.317 2.122 2.258 2.699 2.699
Click to enlarge

M. Shaun Usmar, CFO, said in the conference call about the impairments charge:

On an annual basis, the impairments include just over $2 billion of goodwill related to the low metal price assumptions. The $1 billion related to asset impairments is primarily for Pascua-Lama of about $400 million due to the reduction in market comparable values used to value this project and Pueblo Viejo, about $390 million due to the low metal price assumptions. The impairments impact to earnings was partially offset by a $110 million gain related to the sale of Ruby Hill and Spring Valley.

Commentary:

Barrick released its 4Q'15 and full year 2015 on February 17, 2016. The company gave also 2016 guidance. Revenue was $2.238 billion, down 3% quarter over quarter. You can see the numbers above and see the simple graphs.

I will need comment in detail about the balance sheet, because it will take too much time and will not really be helpful for the common shareholder. The three important achievements for the company has been without a doubt:

1 - Debt reduction that the company successfully completed in 2015. Total debt was $12.748 billion end of 2014 and was $9.765 billion end of 2015. This is an important step toward a strong balance sheet, in my opinion.

2 - ABX generated $471 million in positive free cash flow ("FCF") in 2015, after several years of disappointed negative free cash flow.

3 - Finally, ABX achieved a $33/ Oz reduction in our all-in sustaining costs for the year, from an AISC of $864/ Oz in 2014 to $831/ Oz in 2015, well below ABX original cost guidance for the year. These numbers are quite impressive compared to most of ABX peers.

What really interested me as a potential long-term investment is the comments of M. Kelvin Paul Michael Dushnisky, President, in the conference call:

Based on our current asset mix and before potential divestment, we expect to maintain annual production of at least 4.5 million ounces of gold through 2020. We have significant options within our portfolio to maintain and grow free cash flow beyond this point, and we will continue to assess alternative investments and opportunities which meet our return on invested capital hurdle rate of 15% and align with our strategic focus.

Our goals are to lower our all-in sustaining costs to less than $700 per ounce by 2019 and to reduce total debt to less than $5 billion in the medium term.

This year (2016), we intend to reduce our total debt by at least $2 billion. We plan to do this using three levers: existing cash balances; free cash from operations; and non-core asset sales, joint ventures and partnerships.

The most important element is that the company is working on reducing significantly the AISC to less than $700/ Oz by 2019 which is very impressive and will generate some good income, especially if gold may resume the uptrend that many are suggesting now. But, even more importantly, is that ABX wants to reduce the debt to less than $5 billion in the medium term. M. Dushnisky is setting a reduction of $2 billion in 2016.

Conclusion:

I believe ABX is getting slowly its "things" together with a good strategy in mind, to reduce significantly the long-term debt and to lower progressively the AISC, which is a good sign of efficiency.

The company is now again a good stock for a long investment perspective, in my view. I recommend to add on any weakness, even if the PPS has significantly recovered and seems a little bit overvalued right now.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.