Seeking Alpha

Barrick's dilution may have miner shareholders fearing they're next

  • Barrick Gold's (ABX -6.2%) planned $3B capital raise may be "prudent and necessary" for the company, but it stinks for shareholders, and shares of other big precious metals miners are tumbling too.
  • ABX's move may be sparking fears from shareholders in other miners that they could be next, and that stock offerings of this size could make it hard to raise dividends in the future; "cram-down financing like this is something that companies should consider [only] after their stocks have rallied significantly," Jon Ogg writes.
  • NEM -4.7%, GG -3.8%, KGC -3.9%, SLW -3.2%, GFI -1.3%, NGD -2.2%, AUY -3.3%, CDE -3.3%, TAHO -4.9%.
  • ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG.
Comments (10)
  • Russ Winter
    , contributor
    Comments (648) | Send Message
     
    In reality the analysts are now way too high on mining costs which are dropping steadily.

     

    http://seekingalpha.co...

     

    Newmont’s average cost applicable to sales was $649 an ounce, compared with $693 a year earlier and the $717 average of six estimates compiled by Bloomberg.

     

    Agnico Eagle was 4690, analysts thought $760.
    1 Nov 2013, 01:03 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1721) | Send Message
     
    Barrick ran their company more inefficiently than many other miners for many years.
    1 Nov 2013, 01:13 PM Reply Like
  • Drumstar
    , contributor
    Comments (26) | Send Message
     
    On the analyst call, Gary Goldberg and the new CFO said that they will not be issuing debt or offering stock in the foreseeable future. The have a $5 billion revolver and close to that much more in cash I believe. This quarter they had positive free cash flow for the first time in a few quarters.
    1 Nov 2013, 01:27 PM Reply Like
  • AltaClip
    , contributor
    Comments (44) | Send Message
     
    I see this as more of a (ABX) sotry than all the miners.
    1 Nov 2013, 01:51 PM Reply Like
  • carrinpl
    , contributor
    Comments (3) | Send Message
     
    shit company shit stock not sure how ive held on to it so long see as how management blows it every time they can
    1 Nov 2013, 02:48 PM Reply Like
  • Energex
    , contributor
    Comments (322) | Send Message
     
    What a failure!!! Punishing shareholders by poor corporate governance, slashing the dividend... then turning back begging for help... issuing shares at all times low!!!
    I hope this will not happen to Goldcorp. $1B in cash and $2B credit line. No dividend cut so far and no rush to issue shares. Much better managed company in my opinion.
    2 Nov 2013, 07:57 AM Reply Like
  • Surely
    , contributor
    Comments (197) | Send Message
     
    The link provided under "sparking fears" above must be some kind of joke. The author clearly has no idea what debt or deferred taxes are or the difference between them, suggesting that Goldcorp could issue equity to pay down its deferred tax liability!

     

    There may be genuine fears that other miners will follow Barrick and issue equity but I doubt the site linked above is taken seriously by anyone that matters.
    2 Nov 2013, 10:27 AM Reply Like
  • sethmcs
    , contributor
    Comments (3077) | Send Message
     
    The high speed traders do not take time to analyze they shot the whole sector and sort it out later. Since the miners have already been beaten senseless I am wondering if there is little left to accomplish shorting the sector. The mining stocks should be in stronger hands by now. Will we get a short squeeze? Perhaps. All depends on what is going on in the physical market.
    2 Nov 2013, 11:45 PM Reply Like
  • goldminer01
    , contributor
    Comments (94) | Send Message
     
    Right
    3 Nov 2013, 01:12 AM Reply Like
  • Leroy Jackson
    , contributor
    Comments (83) | Send Message
     
    What a world. I am an older person and can remember when something was a great deal and or of a strong value, it was said to be " as good as gold".
    7 Nov 2013, 06:57 PM Reply Like
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