Seeking Alpha

Barrick Gold +1.5% as falling earnings and production priced in

  • Barrick Gold (ABX+1.5% premarket despite reporting an unadjusted $2.83B Q4 loss as it took $2.82B in after-tax impairment charges, including $896M for the troubled Pascua-Lama project.
  • ABX anticipates 2014 gold production of 6M-6.5M oz. vs. 7.2M oz. in 2013, due to sales of non-core assets and the company's new focus on mining high-margin ounces in a low-price environment instead of just maximizing output; the production drop is within analyst expectations.
  • ABX cuts reserves 26% Y/Y to 104.1M oz. as it reduced the gold price used to calculate them to $1,100/oz. from $1,500 last year.
  • Through all the troubles, ABX's mines are operating well: Gold cost guidance is the lowest among senior producers, with all-in sustaining costs seen at $920-$980/oz. in 2014 after $899/oz. in Q4.
  • Capital spending totaled ~$5B in 2013, but is expected to fall to $2.4B-$2.7B this year with the idling of Pascua-Lama.
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