Is Barrick a Better Gold Mining Bet Than Newmont?

Commodities & Metals

Published: February 18, 2016 12:55 pm

Last Updated: January 13, 2020 1:01 pm

Since the beginning of the year, gold has added nearly 13%, with most of the gain coming since the beginning of February. Gold mining stocks are performing even better.

Both Barrick Gold Corp. (NYSE: ABX) and Newmont Mining Corp. (NYSE: NEM) reported fourth-quarter results on Wednesday, but investor reaction has been significantly different. Barrick’s shares traded up about 5% Thursday, while Newmont’s have struggled just to reach the break-even line, after posting a morning low of $23.12, down nearly 7% from Wednesday’s closing price.

For the month of February, Barrick’s stock is up more than 26% and Newmont’s is up more than 24%. Since the beginning of the year, Barrick shares have soared nearly 70% and Newmont’s have jumped nearly 40%.

In its announcement Wednesday, Barrick said that it cut its debt by $3.1 billion in 2015 and that it wants to cut remaining debt by an additional $2 billion this year. The company is also targeting an all-in sustaining cost of production of $700 an ounce for gold by 2019. In 2014 the company’s all-in cost was $925, and that dropped to $733 in 2015. Output for 2016 is forecast at 5.o million to 5.5 million ounces, with all-in costs in the range of $775 to $825 per ounce. Barrick’s long-term debt totaled about $9.8 billion at year-end.

Newmont expects 2016 production of 4.8 million to 5.3 million ounces of gold at an all-in sustaining cost of $900 to $960 an ounce. The company is targeting all-in costs of $850 to $950 per ounce in 2017. The company also said it paid $200 million last year on its existing term loan and $250 million on project debt. Newmont’s reported long-term debt totaled about $6.1 billion.