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Barrick Gold's financial performance in 2018 will be erased from a smaller volume




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On this photo from May 23, 2013, workers walk around the entrance to the Barrick gold mine facility in northern Chile. (AP Photo / Jorge Saenz)

Barrick Gold Corp (NYSE: GOLD), one of the largest gold mining companies in the world, will announce its results for the fourth quarter on February 13, 2019, followed by a conference call with analysts. The market expects the company to report revenue of $ 1.95 billion in the fourth quarter, which is 12.4% lower than in the fourth quarter of 2017. The adjusted quarterly profit is expected to be $ 0.12 per share with $ 0.22 per share in the previous period. The annual adjusted EPS is expected to be $ 0.42 in 2018, 44% lower than $ 0.75 in 2017. The lower EPS is likely to be the result of lower gold and copper volumes, lower realized prices, and high depreciation costs, slightly offset by lower interest costs on the back of early repayment of the debt.

We summed up our key predictions for Barrick Gold's 2018 results in the interactive Dashboard – Lower prices and production to affect Barrick Gold's finances in 2018. We have a price tag of $ 14 per share for the company, which is higher than its current market price.

Trefis

Key factors affecting revenue

Refunds: Over the past four years, total production of gold and honey from Barrick Gold has been steadily declining. Gold production declined from 6.1 million Ounces in 2015 to 5.3 million Ounces in 2017. Similarly, copper production fell from 513 million pounds in 2015 to 413 million pounds in 2017. the preliminary report of the company, the production of gold and honey will continue to decrease to 4.5 million ounces and 383 million pounds in 2018 respectively. The decrease in volume in 2018 is mainly due to the 50% impact of the sale of the Veladero mine at 30 June 2017, Barrick Nevada's lower grade and recovery through an oxide mill and autoclave, lower tonnage processed in Lagunas Norte, and a lower grade in Pueblo Viejo, partly offset by larger production at Turquoise Ridge. This is expected to result in more than 14% decline in gold shipments and near 6% decline in copper supplies in 2018, thus adversely affecting revenue.

Lower price: Gold and copper prices have witnessed a high volatility in 2018. Gold prices have fallen from the first quarter of 2018 to the third quarter of 2018, mainly due to rising interest rates in the United States and the strengthening of the dollar, making investment in dollar more profitable. However, in the fourth quarter, gold prices recovered, with central banks around the world buying more gold as a hedge against the expected economic uncertainty over the next two years. We expect gold prices to be $ 1226 per ounce in the fourth quarter of 2018, a little higher than $ 1,216 in the previous quarter. Copper prices fell in the second half of 2018 due to US-China trade tensions. However, prices have rebounded slightly towards the end of 2018. We expect the realized price of pound honey to be $ 2.80 in the fourth quarter of 2018.

Higher AISC: Everything to support the price of an ounce of gold is constantly increasing from 2016 and is expected to be $ 815 in 2018, up 8.7% higher than in 2017. The increase in costs is mainly due to the impact of less sold gold ounces, and higher direct cost yields due to higher fuel prices and planned Pueblo Viejo autoclaves. AISC per kilogram of copper is expected to grow by 17.5% to $ 2.75 in 2018, mainly due to higher direct mining costs associated with lower waste capitalization, higher maintenance costs, combined with higher fuel costs and consumables in Lumwana.

The whole year

For the whole of 2018, we expect total revenues to drop by 13.7% to 7.2 billion dollars, compared with 8.3 billion dollars in 2017. This is most likely to be the result of lower revenues from sales of gold and copper in the face of declining supplies and lower prices. conversion. The higher AISC is expected to have an adverse effect on profitability, slightly offset by lower interest costs (the company redeemed $ 629 million from 4.4% in July 2018. In addition, unlike the large depreciation of impairment in 2017 we expect a significant write-down of around $ 500 million for Barrick Gold in 2018 due to Lagunas Norte's project-related depreciation costs, the Kabanga project, and the Acacia Nyanzaga project in Tanzania, the net margin the profit to be close to 1% for the year, a sharp decline compared with 17.2% in 2017 (the margin was higher in 2017 due to recurring profits).

The future is full of opportunities and a great challenge

2019 promises to be a year of transition for Barrick Gold with its $ 6.5 billion merger with Randgold Resources, which entered into force on January 1, 2019. The joint venture, with a $ 10 billion revenue generation capacity per year, now owns five of the world's ten lowest-valued gold mines in the world. Moreover, the high quality of Randgold (an average estimate of 3.7 grams per ton in the past three years is much higher than Barrick's average of 1.55 and an average of 1.12 grams per ton for the five largest producers), cost-effective mining costs, better working capital, and efficient supply chain logistics will likely help Barrick Gold Corp to achieve synergies with this merger. Expectations for larger volumes, revenues and margins would support the growth in the company's stock price. The only major challenge in 2019 and then would be to take over Newmont Mining, which, along with the merger with Goldcorp (expected to end in the second quarter of 2019), will become the largest gold company in the world. It would be interesting to trace what strategies Barrick Gold creates to take over the power of Newmont in 2019 and beyond.

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On this photo from May 23, 2013, workers walk around the entrance to the Barrick gold mine facility in northern Chile. (AP Photo / Jorge Saenz)

Barrick Gold Corp (NYSE: GOLD), one of the largest gold mining companies in the world, will announce its results for the fourth quarter on February 13, 2019, followed by a conference call with analysts. The market expects the company to report revenue of $ 1.95 billion in the fourth quarter, which is 12.4% lower than in the fourth quarter of 2017. The adjusted quarterly profit is expected to be $ 0.12 per share with $ 0.22 per share in the previous period. The annual adjusted EPS is expected to be $ 0.42 in 2018, 44% lower than $ 0.75 in 2017. The lower EPS is likely to be the result of lower gold and copper volumes, lower realized prices, and high depreciation costs, slightly offset by lower interest costs on the back of early repayment of the debt.

We summed up our key predictions for Barrick Gold's 2018 results in our interactive Dashboard – Lower Prices and Production to Influence Barrick Gold's Finance In 2018 We have a price tag of $ 14 per share for the company, which is higher than its current market price.

Key factors affecting revenue

Refunds: Over the past four years, total production of gold and honey from Barrick Gold has been steadily declining. Gold production declined from 6.1 million Ounces in 2015 to 5.3 million Ounces in 2017. Similarly, copper production fell from 513 million pounds in 2015 to 413 million pounds in 2017. the preliminary report of the company, the production of gold and honey will continue to decrease to 4.5 million ounces and 383 million pounds in 2018 respectively. The decrease in volume in 2018 is mainly due to the 50% impact of the sale of the Veladero mine at 30 June 2017, Barrick Nevada's lower grade and recovery through an oxide mill and autoclave, lower tonnage processed in Lagunas Norte, and a lower grade in Pueblo Viejo, partly offset by larger production at Turquoise Ridge. This is expected to result in more than 14% decline in gold shipments and near 6% decline in copper supplies in 2018, thus adversely affecting revenue.

Lower price: Gold and copper prices have witnessed a high volatility in 2018. Gold prices have fallen from the first quarter of 2018 to the third quarter of 2018, mainly due to rising interest rates in the United States and the strengthening of the dollar, making investment in dollar more profitable. However, in the fourth quarter, gold prices recovered, with central banks around the world buying more gold as a hedge against the expected economic uncertainty over the next two years. We expect gold prices to be $ 1226 per ounce in the fourth quarter of 2018, a little higher than $ 1,216 in the previous quarter. Copper prices fell in the second half of 2018 due to US-China trade tensions. However, prices have rebounded slightly towards the end of 2018. We expect the realized price of pound honey to be $ 2.80 in the fourth quarter of 2018.

Higher AISC: Everything to support the price of an ounce of gold is constantly increasing from 2016 and is expected to be $ 815 in 2018, up 8.7% higher than in 2017. The increase in costs is mainly due to the impact of less sold gold ounces, and higher direct cost yields due to higher fuel prices and planned Pueblo Viejo autoclaves. AISC per kilogram of copper is expected to grow by 17.5% to $ 2.75 in 2018, mainly due to higher direct mining costs associated with lower waste capitalization, higher maintenance costs, combined with higher fuel costs and consumables in Lumwana.

The whole year

For the whole of 2018, we expect total revenues to drop by 13.7% to 7.2 billion dollars, compared with 8.3 billion dollars in 2017. This is most likely to be the result of lower revenues from sales of gold and copper in the face of declining supplies and lower prices. conversion. The higher AISC is expected to have an adverse effect on profitability, slightly offset by lower interest costs (the company redeemed $ 629 million from 4.4% in July 2018. In addition, unlike the large depreciation of impairment in 2017 we expect a significant write-down of around $ 500 million for Barrick Gold in 2018 due to Lagunas Norte's project-related depreciation costs, the Kabanga project, and the Acacia Nyanzaga project in Tanzania, the net margin the profit to be close to 1% for the year, a sharp decline compared with 17.2% in 2017 (the margin was higher in 2017 due to recurring profits).

The future is full of opportunities and a great challenge

2019 promises to be a year of transition for Barrick Gold with its $ 6.5 billion merger with Randgold Resources, which entered into force on January 1, 2019. The joint venture, with a $ 10 billion revenue generation capacity per year, now owns five of the world's ten lowest-valued gold mines in the world. Moreover, the high quality of Randgold (an average estimate of 3.7 grams per ton in the past three years is much higher than Barrick's average of 1.55 and an average of 1.12 grams per ton for the five largest producers), cost-effective mining costs, better working capital, and efficient supply chain logistics will likely help Barrick Gold Corp to achieve synergies with this merger. Expectations for larger volumes, revenues and margins would support the growth in the company's stock price. The only major challenge in 2019 and then would be to take over Newmont Mining, which, along with the merger with Goldcorp (expected to end in the second quarter of 2019), will become the largest gold company in the world. It would be interesting to trace what strategies Barrick Gold creates to take over the power of Newmont in 2019 and beyond.

What's behind Trefis? See How is new co-operation and what-if

About Financial directors and financial teams | Product, R & D, and marketing teams

More Trefis Research

Like our graphics? Explore sample interactive boards and create your own.


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