Commodities & Metals

What's Holding Back Gold Miner Barrick 

Barrick Gold Corp. (NYSE: GOLD) reported second-quarter 2020 earnings before markets opened Monday. The gold miner posted adjusted earnings per share (EPS) of $0.23 on revenues of $3.06 billion. In the same period a year ago, the company reported EPS of $0.09 on revenues of $2.06 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.09 and $2.89 billion in revenues.

Barrick also announced a quarterly dividend increase of $0.01 per share (14%) to $0.08 or $0.32 annualized.

Year over year, revenue is up 48% and adjusted EPS is up 156%.

Spot gold traded at $2,024.40 early Monday. The 52-week range for gold pricing is $1,446.20 to $2,089.20. Gold futures for October of 2021 are trading below the top end of the current 52-week range. To gold traders, that indicates a flat or slightly declining price outlook.

The company’s realized gold price for the quarter was $1,725 per ounce, up 31% year over year and 9% sequentially. Barrick sold 1.15 million ounces of gold in the quarter, down 15% year over year and down 8% annually. Total cash costs per ounce rose 10% year over year to $716, and all-in sustaining costs rose 19% to $1,031 per ounce.

In the first half of the year, the company’s realized price for gold is up 26%, from $1,312 per ounce in the first half of 2019 to $1,657 this year.

Barrick also reported sales of 123 million pounds of copper, up 28% year over year at a realized price of $2.79 a pound (up 6%). All-in sustaining costs fell 6% to $2.15 per pound.

Toronto-based Barrick said current and long-term debt totaled $5.17 billion at the end of the quarter, down 11% year over year. Cash and equivalents rose 74% to $3.74 billion. Net debt has dropped 61% to $1.43 billion and the company noted that it faces no “significant” maturities until 2033.

In its gold production forecast, Barrick said it expects full-year production of 4,600 to 5,000 ounces of gold with all-in sustaining costs in a range of $920 to $970 per ounce. Copper production was forecast at 440 million to 500 million pounds with an all-in cost of $2.20 to $2.50 per ounce.

Operating cash flow for the quarter totaled $1.03 billion, more than double the $434 million posted a year ago. Capital spending totaled $509 million, compared to $379 million in the second quarter of 2019. Free cash flow rose from $55 million a year ago to $522 million.

The company did not provide earnings and revenue guidance, but analysts forecast third-quarter EPS at $0.23 on sales of $3.2 billion. For the full year, the EPS estimate is $0.84 and revenue is pegged at $11.51 billion.

In Monday’s premarket session, Barrick shares traded up 1.4% to $29.29, in a 52-week range of $12.65 to $30.69. The consensus price target on the stock is $31.65, implying potential upside of around 9.6% to Friday’s closing price of $28.87.