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Barrick Gold Corporation (ABX)

  • Wed, Jan. 14, 6:25 PM
    • Goldcorp (NYSE:GG) could soon join a group of large gold miners that have a net loss to show for their entire history as corporate entities, Financial Post's Peter Koven writes.
    • GG warned this week that it expects to record a $2.3B-$2.7B impairment charge on its Cerro Negro mine in Argentina; since the miner’s retained earnings were $2.2B as of Sept. 30, they may be completely wiped out in its next quarterly report.
    • That's not unusual in the gold industry, where writedowns have destroyed historic profits in recent years: Barrick Gold (NYSE:ABX) has retained earnings of -$7.8B, Kinross Gold (NYSE:KGC) has -$8.5B in historic losses, AngloGold Ashanti (NYSE:AU) has -$4B, and Agnico Eagle Mines (NYSE:AEM) has a mere -$740M.
    • The writedowns are non-cash and have no impact on day-to-day operations, but they have damaged the reputations of gold miners and drove away investors who have proven tough to woo back, Koven writes.
  • Fri, Jan. 9, 10:41 AM
    • Nearly every sell-side analyst calls Barrick Gold (ABX +1.5%) a Buy or a Hold after shares have lost ~40% in the past six months, but Macquarie downgrades the stock to Underperform with an $11 price target, saying ABX has limited options to repair its balance sheet and needs more time to regain investor confidence.
    • ABX already has taken $14.2B in various writedowns, and the firm foresees another ~$2.5B impairment charge on the Lumwana mine in its Q4 results, but writedowns are old news and already baked into the stock price; a bigger concern, Macquarie says, is how ABX will improve its shrinking production profile and troubled balance sheet down the road.
    • ABX is looking to boost output at its Goldstrike operation in Nevada by using a new commercial process to extract gold using calcium thiosulphate instead of cyanide, but Macquarie considers the process very complex and risky, and doubts ABX will reach its production targets anytime soon.
    • Earlier: Barrick Gold downgraded at RBC following recent bump
  • Thu, Jan. 8, 11:36 AM
    • Barrick Gold (ABX +1.1%) is downgraded to Sector Perform from Outperform with a $14 price target, down from $17, at RBC after rising more than 5% YTD, citing uncertainty about the miner’s debt and capital allocation.
    • RBC notes that ABX’s debt-to-total-capital ratio is 45%, so its financial leverage is higher than average, and points to market concerns about how ABX will fund future capital and repay debt.
    • The firm believes ABX needs to generate excess cash to reduce its ~$13B in long-term debt through the sale of non-core assets or from free cash flow, as well as create operating joint ventures for its copper and gold mines, or negotiate strategic financing agreements.
    | 1 Comment
  • Tue, Jan. 6, 5:45 PM
    • Silver Wheaton's (NYSE:SLW) amended agreement with Barrick Gold (NYSE:ABX) to receive silver from the Pascua-Lama mine benefits both companies, Cowen analysts say, helping ABX conserve cash while allowing SLW to hold optionality at $1,200/oz. gold.
    • For ABX, the new deal provides three additional years to repair its balance sheet, find alternative financing, or wait for a higher gold price, as well as delaying the potential impact of a multimillion dollar payout to SLW; in return, SLW will maintain its optionality in Pascua-Lama, which - if the mine ever achieves production - could provide nearly 60M additional silver oz. over the asset’s first 10 years of mine-life at a cost of ~$4/oz.
    • J.P. Morgan says the deal should have no material impact on ABX’s valuation since Pascua-Lama is seen by the market as an out-of-the-money option to which little value is assigned for now.
    | Comment!
  • Tue, Jan. 6, 3:33 PM
  • Mon, Jan. 5, 10:25 AM
    • Silver Wheaton (SLW -0.3%) says it has again extended a silver streaming agreement related to Barrick Gold's (ABX -2%) halted Pascua-Lama project, giving it another 15 months of silver production from three of ABX’s other projects.
    • SLW’s streaming agreement for Pascua-Lama started in 2009, when it agreed to buy 25% of the silver production from the project plus 100% of the production from ABX’s Lagunas Norte, Pierina and Veladero mines; when ABX suspended construction of Pascua-Lama to cut costs amid slumping gold prices, SLW began receiving additional production from the other three ABX mines.
    • SLW now will be entitled to additional production from the three mines until March 2018.
    | Comment!
  • Fri, Jan. 2, 8:47 AM
    • Barrick Gold (NYSE:ABX) says Chile's Supreme Court has refused to hear its appeal of a lower court's decision involving fines imposed on the Pascua-Lama gold and silver project by the country's environmental regulator.
    • The regulator fined ABX $16M near two years ago for not complying with environmental requirements, and says it will now re-evaluate the fines it imposed on the project.
    • ABX halted development of Pascua-Lama, once its biggest new development project, in Oct. 2013 after struggling with political opposition, permitting issues, labor unrest, cost overruns and falling gold prices.
    • ABX -1.3% premarket.
  • Dec. 30, 2014, 4:18 PM
    • With the dollar falling against the yen and pound and a minor flight to safety afoot - Treasurys are higher, stocks have closed moderately lower - COMEX gold is up 1.4% today to $1,197/oz., and COMEX silver is up 2.6% to $16.20/oz. The gains have provided a lift to the volatile/beaten-down shares of gold and silver miners.
    • Notable gold gainers: IAG +11.7%. ABX +3.6%. AUY +5.2%. NEM +3.6%. GG +4.6%. AU +4.2%. SBGL +4.9%. KGC +4.1%. AGI +5%. AEM +5.1%.
    • Notable silver gainers: AG +7.6%. SVM +7.1%. SSRI +6.2%. SVM +6.4%. PAAS +3.9%. SVLC +5.2%. EXK +6.9%.
    • ETFs with 3%+ gains: NUGT +10.1%. GDXJ +5.1%. USLV +9.7%. UBG +5.4%. USV +3.8%. SIVR +3.4%. AGQ +6.3%. BAR +3.2%. DBS +3.2%.
    • The group rallied on Friday after the PBOC relaxed lending rules for banks, but sold off on Monday.
  • Dec. 26, 2014, 3:34 PM
  • Dec. 23, 2014, 12:58 PM
    • The new tax laws in Zambia could turn out to be a positive for First Quantum Minerals (OTCPK:FQVLF) even as high-cost producers such as Barrick Gold (NYSE:ABX) begin to close operations, CIBC analyst Tom Meyer says.
    • Zambia's budget, which included a revision to the mining tax scheme that would require open pit miners to pay a 20% mineral royalty tax, was passed on Dec. 17 and First Quantum’s stock has come under pressure since ~40% of the company’s operating base is located in the country.
    • "As a low cost producer in Zambia, First Quantum could be a net beneficiary of the new system,” Meyer says, adding that a comparison of effective tax rates under the two systems "shows that the new system is increasingly favorable for the miners when the copper price is rising.”
    | 1 Comment
  • Dec. 18, 2014, 9:07 AM
    • Barrick Gold (NYSE:ABX) confirms it is suspending operations at the Lumwana copper mine in Zambia after the country passed legislation to more than triple the royalty rate on open-pit mining operations.
    • "Despite the progress we have made to reduce costs and improve efficiency at the mine, the economics of an operation such as Lumwana cannot support a 20% gross royalty, particularly in the current copper price environment,” ABX says.
    • ABX says it will record an unspecified impairment charge related to Lumwana in Q4; it says the operation’s current net carrying value is ~$1B.
    • Earlier: Barrick Gold likely to suspend Zambian mine
    | 1 Comment
  • Dec. 17, 2014, 6:50 PM
    • Barrick Gold (NYSE:ABX) probably will take steps - perhaps as soon as tomorrow - to stop production at its Zambian operation after the country increased mining royalties, Bloomberg reports.
    • Zambia's parliament approved the government's 2015 budget proposals, which will replace corporate income tax on mines with increased royalties and increase the rates on open-pit mines such as ABX’s Lumwana to 20% from 6%.
  • Dec. 3, 2014, 9:11 AM
    • Barrick Gold (NYSE:ABX) says it has completed a 50-50 joint venture with Saudi Arabia's Ma'aden to run its Jabal Sayid copper asset in the kingdom, and the mine is now expected to begin shipping low-cost concentrate in early 2016.
    • When fully operational, the mine is expected to produce 100M lbs./year of copper in concentrate in its first full five years, with the potential to increase to 130M lbs./year.
    | Comment!
  • Dec. 1, 2014, 4:45 PM
    • Gold futures surged 3.6% to reclaim the $1,200 level for the first time since late October, sparked in part by the downgrade of Japan’s sovereign debt rating and a retreat in the dollar, as well as India easing its import restrictions and some short covering.
    • Gold had sold off initially amid news that Swiss voters rejected a referendum to force the Swiss National Bank to hold 20% of its reserves in gold, slumping to overnight lows near $1,140/oz. before rallying to settle at $1,218.
    • As a result, gold miners were among the strongest sectors, with the Market Vectors Gold Miners ETF (NYSEARCA:GDX) finishing 7.7% higher; investors also may have reacted to takeover speculation, as weekend reports said Paramount Gold (NYSEMKT:PZG) was is in talks to be acquired by Coeur Mining (NYSE:CDE).
    • Among the top precious metals miners: ABX +4.3%, AEM +6.9%, AU +9.1%, GG +8.2%, GFI +9.2%, SLW +7.2%, NEM +6.8%, AGI +7.7%, IAG +11.3%, AUY +7.4%, KGC +8.5%, NGD +13.7%, GOLD +6.4%, RGLD +7%.
  • Nov. 28, 2014, 1:21 PM
    • Already hit hard over the last two years by declining prices, gold and silver miners saw more pain today as commodity stocks in general got hammered thanks to OPEC's decision not to slash crude production.
    • Decliners: ABX -8%. GG -6.1%. AUY -9.8%. KGC -8.2%. GFI -9.9%. SLW -7%. NEM -5.8%. AGI -6.9%. PAAS -9%. AG -15.4%. SSRI -11.6%. CDE -11.4%. HL -8.8%. TAHO -7.8%.
    • Previous: Precious metals slide alongside oil; Swiss vote ahead
  • Nov. 20, 2014, 3:13 PM
    • Given the uncertain and volatile outlook for the dollar and thus gold prices, J.P. Morgan's commodities team suggests three "conservative" pair trades it expects to be profitable in a neutral or weaker metal price environment.
    • The firm recommends buying Newmont Mining (NYSE:NEM) and selling Barrick Gold (NYSE:ABX), “driven by the idea that the deal where Barrick buys Newmont could be back."
    • Buy Agnico Eagle Mines (NYSE:AEM) and sell New Gold (NYSEMKT:NGD), as JPM sees underground mines as more resilient than open pits, and AEM has fallen more sharply than deserved.
    • Also, JPM likes buying Silver Wheaton (NYSE:SLW) and selling Coeur Mining (NYSE:CDE), as it believes royalty/streaming companies will be more robust in times of weak metals prices than pure-play miners.
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Company Description
Barrick Gold Corp produces and sells gold and copper. The Company business activities also includes exploration and mine development. It holds interests in oil and gas properties located in Canada.
Industry: Gold
Country: Canada