Barrick Gold Corp (ABX) Com Stk (CDI)

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Barrick reported 13% growth in full year revenue to $12.9bn, driven largely by higher gold and copper prices which offset a drop in gold production volumes.

Underlying cash profit (EBITDA) rose 30% to $5.2bn. Production costs were higher than guided, but good control in the fourth quarter and savings in other areas helped margins expand.

Free cash flow more than doubled to $1.3bn, with $0.5bn returned via buybacks over the year. The buyback has been renewed for the coming year, up to £1bn. Net debt rose 13% to $0.7bn.

A quarterly dividend of $0.10 per share was announced.

Guidance for a 15% drop in gold production over 2025 reflects the suspension of operations at its Loulo-Gounkoto mine in Mali, where there has been no improvement in relations with the local government. Copper production is expected to rise 10%.

The US listing of shares was broadly flat in pre-market trading.

Our view

Barrick is riding on the coat tails of higher gold prices, and for now that’s providing enough of a boost to provide decent cash flows. But underlying production challenges remain, compounded by ongoing tensions in Mali.

The Loulo-Gounkoto operation is still suspended after a run-in with the local Mali government. Barrick has an 80% stake in the operation, and it accounts for about 15% of total gold production. That’s enough to move the dial and a key cause for concern.

That said, Barrick’s in the first innings of a new 5-year plan, and production challenges in the near term extend beyond Mali. The good news is that expectations have now been reset and the valuation looks to have most of this built in already.

Sticky inflation has been a persistent thorn, and Barrick has now missed its original gold cost guidance for the past 3 years. A mix of lower production and increased maintenance have also been adding pressure to the cost line. We don’t see much near-term let-up, as higher investment at the key Nevada sites along with continued pressure on US wages are both ongoing headwinds.

Squeezing more from existing mines can be a particularly powerful driver for the group - since costs rarely increase in line with output. On that note, the expansion of the low-cost Pueblo Viejo mine and ramp up of the Porgera mine are both positive catalysts for gold production over the short and medium term.

Gold is over 90% of Barrick’s revenue but copper is becoming an ever-growing part of the mix too, with plans to more than double production levels by 2029. There’s been some solid progress at two key copper sites but it’s going to cost, with planned capex at the group level of $16bn over the next 5 years.

The balance sheet is in decent shape, but the lack of net cash position means there’s no scope for dividends beyond the base $0.10 a quarter anytime soon. The company is taking the depressed valuation as a chance to buy back its own shares and has given itself the green light to buy back up to $1bn over the coming year – though no returns are guaranteed.

Last we heard, prices were high enough that free cash flow had returned, but the net cash position seen for parts of last year has disappeared. Debt's still low so there are no immediate liquidity concerns, but it highlights the speed at which things can change.

2025 looks set to be another choppy year and conflicts have continued to cause turbulence across the globe. The general level of uncertainty should help keep gold prices elevated, though there are no guarantees.

Recent production challenges and more recent clashes with the Mali government mean the valuation’s been under some pressure. We’re mindful of the challenges in the short term, but still feel Barrick’s large, diversified, footprint is one of the better options in the gold mining sector. Of course, there are no guarantees.

Environmental, social and governance (ESG) risk

Mining companies tend to come with relatively high ESG risk. Emissions, effluences and waste, and community relations are key risk drivers in this sector. Carbon emissions, resource use, health and safety and bribery, and corruption are also contributors to ESG risk.

According to Sustainalytics, Barrick’s management of material ESG issues is strong.

Barrick has robust ESG policies with best practices like performance targets and independent certification. It has a strong climate change strategy and effective water risk management, using various tools to assess water risks. Barrick is aiming for net-zero emissions, with a 2030 target to reduce operational greenhouse gas emissions by 30% from 2018 levels. Government relations are key, as we’re seeing play out in Mali, and Barricks exposure to areas like Latin America and Africa adds an extra layer of risk.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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