Barrick Gold: Is It Time to Get Out?

Mining stocks have certainly outperformed the market this year and gold stocks in particular are soaring. Barrick Gold (ABX) has been a great performer as the stock has soared in triple-digits since the beginning of the year. With gold prices soaring and the prospects of U.S. Dollar still dim, investors can still count on gold stocks like Barrick Gold despite the massive surge.

Boosted Operating margin

According to the first quarter results, it is clear that Barrick Gold is performing very well as it produced 1.28 million ounces of gold at an AISC of $706 per ounce.
More significantly, the all-in-cost is a striking surprise as this is lesser than predicted mainly due to enduring operating and capital cost savings. However, investors should also remember that this will be a one-time result, and the AISC will probably surge by additional of 10 percent in the forthcoming three quarters of this year.

On the other hand, the full-year guidance has also been rationalised; the production guidance relics unaffected in the range of 5-5.5 million ounces of gold, but delivering robust results of the first quarter, the company has now decreased the AISC guidance from $775-$825 per oz to $760-810 per oz.

Barrick Gold generated total revenue of $1.93 billion in the first quarter, ensuing in an EBIT of $325 million. That is approximately 20 percent poorer equated to the same quarter in the prior financial year, but in the first quarter of this year, the company’s expenditures surged by almost $140 million mainly because of forex loss of $139 million, leading to a net loss of $83 million or 7 cents per share.

However, if the forex loss is excluded, Barrick Gold would possibly have posted an optimistic financial result and an overall profit for the first quarter of 2016. That is, in fact, a very inspiring symbol and as Barrick Gold has not shattered its cost of sales into expenditures that have proficiently been made.

Despite the earnings miss, Barrick Gold’s condition certainly enhanced. The operating cash flow surged by approximately 40 percent to $451 million and as the capital expenses dropped by 40 percent as well, the company generated positive free cash flow in its most recent quarter.


With the U.S. Dollar heading lower, prospects of gold are still bright, which is why investors can expect gold stocks like Barrick Gold to move higher in the short to mid-term.
Published on May 2, 2016
By Yaggyaseni Mittra

Copyrighted 2020. Content published with author's permission.

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