Barrick Gold Corp (ABX) Com Stk (CDI)

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Barrick reported third-quarter revenue of $3.4bn, up 18%. Gold revenue rose 20%, while copper was up 2%. Both benefited from higher realized prices, which offset production declines. Underlying cash profit (EBITDA) rose 21% to $1.3bn.

Free cash flow rose 24% to $444mn, and net debt was down 3% to £500mn.

The quarterly dividend was unchanged at $0.10 per share. The company also repurchased $95mn worth of shares over the quarter.

Gold production is expected at the low end of the guided range for the full year despite a ramp-up in the fourth quarter. Copper production is on track, with a strong fourth quarter also expected.

The US listing of the shares fell 1.6% in pre-market trading.

Our view

Barrick's top line continues to benefit from buoyant gold prices. That's helping to cover some of the production cracks seen in recent results, though things are expected to improve in the latter part of the year.

Sticky inflation has been a persistent thorn over the year, and Barrick has missed its original gold cost guidance for two years in a row. A mix of lower production and increased maintenance have also been adding pressure to the cost line. Things are expected to improve from here, with Barrick expecting the increased production to drive costs down.

Squezing 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 restarting of the Pogera mine are both positive catalysts for production over the short and medium term.

There's also been positive progression in both Gold and Copper reserve levels, as organic and inorganic expansion uncovers new deposits. Nevada is advancing exploration in the Cortez complex and Carlin Trend, while Latin America and Asia Pacific are focusing on drill-ready targets and refining their portfolios. In Africa and the Middle East, promising deposits are emerging in the Loulo district and Kibali, and exploration in Tanzania has uncovered gold and copper anomalies for further testing.

These projects are key, as they help deliver a path to continued production expansion.

But these projects don't come cheap, nor do the ongoing maintenance costs just to keep mines running. For now, prices are high enough that free cash flow has 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.

However, the strong start to the year has allowed the company to dip into the $1bn share buyback allowance which management plan to use at their discretion over 2024. There are, however, no guarantees of any returns to shareholders.

2024 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.

We view Barrick's large, diversified, footprint as one of the better options in the gold mining sector and positioned to potentially benefit if the gold price stays elevated. But we would remind investors that Barrick doesn't control commodity prices and performance can be volatile.

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.

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.

Previous Barrick Gold Corp updates