GOLD - Barrick Gold: Back On The Sale Rack
2024-02-15 09:55:30 ET
Summary
- Barrick Gold Corporation had a tough year in 2023 with production below guidance and all-in sustaining costs coming in above my estimates.
- That said, AISC margins still improved year-over-year, as did operating cash flow and free cash flow & Barrick will see further growth in earnings and free cash flow this year.
- In this update, we'll dig into the Q4/FY2023 results, recent developments, and whether Barrick has entered a low-risk buy zone after its recent ~26% correction.
It's been a rough start to the year for the Gold Miners Index ( GDX ), to say the least, with the index on track for its worst start to the year since 2020. This departure from its prior uptrend is even more disappointing, given that January and February are typically two of the best months of the year for the Gold Bugs Index going back nearly thirty years. In fact, the [-] 18% year-to-date return has underperformed historical averages by 2200 basis points, a massive divergence vs. its normal seasonality.
Gold Bugs Index Monthly Average Returns - Author's Data & Chart
Obviously, there are some reasons for this underperformance vs. seasonality, with stickier than expected inflationary pressures contributing to less margin expansion than hoped in 2023. On top of this, quite a few producers will have transition years in 2024, with major construction projects underway which will contribute to improved free cash flow profiles in 2025....
Barrick Gold: Back On The Sale Rack