RGLD - Barrick's Production Miss Not So Bad? | Benzinga
Source: Adrian Day 04/24/2024
Global Analyst Adrian Day looks at more first-quarter results from some resource companies, as well as some positive exploration results that, according to him, could extend a mine's life.
Barrick Gold Corp. (NYSE: GOLD) maintained its full-year guidance after first-quarter production in both gold and copper, which came in lower than expected. Part of the lower production was because of planned maintenance at the Nevada Gold Mines, but other causes were unexpected, including lower grades at Lumwana.
The lower production, with copper output in particular weak, about 15% lower than the consensus estimates, meant higher per-unit costs. Barrick estimated that its costs for gold at about $1,473 per ounce (for All-In Sustaining Costs) would come in about 8% higher than the previous quarter, while copper would jump about 15%. Once again, Barrick will not generate meaningful free cash flow for the quarter.
As usual, Barrick said it expected production to increase throughout the year, with the first quarter usually being its lowest. It pointed to Pueblo Viejo's expansion ramping up in the second quarter and the restart of Porgera.
Potential Bad News From Mali
Just as Barrick was reporting its first-quarter production (with full results scheduled for May 1) came a report that Mali's military government was planning to expropriate its Loulo-Gounkoto gold mine, which represents about 9% of the company's NAV. Mali's junta has been targeting the mining sector with a controversial audit of the industry as well as a proposed new mining code.
Barrick has not commented on the report. Separately, there are reports that Saudi Arabia is close to a deal to acquire a minority stake in Barrick's Reko Diq mine in Pakistan, investing at least $1 billion to buy part of the government's stake.
Saudi Arabia's interest has been public. Though any deal would not affect Barrick's interest in the project, it would be a positive, bringing in a wellfunded partner. Barrick's stock sunk sharply on the one-two punch from the production shortfall and Mali report, falling from over $18 to under $16.50 before a partial recovery.
In truth, it was an overreaction. The higher costs were for the most partly simply a function of lower production, while the production miss, beyond the planned Nevada maintenance, was quite minor, and the company reiterated its full-year guidance, backed by solid reasons. In truth, I think investor ...