Barrick sells non-core mines

Barrick Gold (ABX) has stated its intention to focus on mines in the Americas region going forward. This region includes the Nevada region in North America and the Andes region in South America. The mines in these regions usually have a lower cost of production. Thus, Barrick intends to selectively sell off mines in other regions to reduce its cost of production as well as to reduce its debt. In keeping with this strategy, the company has sold off non-core mines, reducing the number of mines from 27 to 19 in the last two years.

How Has Barrick Progressed towards Its Debt Reduction Target?

Debt reduction target

In addition to decreasing production costs, Barrick has set a target of reducing debt by $3 billion by the end of 2015. Barrick is following a three-pronged strategy to achieve this. As depicted in the graph above, this includes maximizing cash flow, selling non-core assets, and forming joint ventures and partnerships. To read more about the three-pronged approach, read Market Realist’s Barrick Gold plans to deleverage its balance sheet in 2015.

Barrick has higher financial leverage compared to its peers, including Goldcorp (GG), Yamana Gold (AUY), and Agnico Eagle Mines (AEM). Barrick’s debt is a major concern for investors. If Barrick is able to reduce its debt as planned, it could lead to a re-rating of its stock.

Gold-backed ETFs such as the SPDR Gold Trust (GLD) and the VanEck Vectors Gold Miners Index (GDX) are good alternative ways to get exposure to gold. Barrick Gold (ABX) forms 7% of GDX’s holdings.

Series overview

In this series, we’ll discuss the recent steps taken by Barrick towards the attainment of its debt reduction target. There have been two major developments in this regard. One is the 100% sale of the Cowal mine in Australia and the other is the 50% stake sale in the Porgera joint venture (or JV) in Papua New Guinea. We’ll discuss how these steps will lead to debt reduction and the implications of these steps for Barrick’s production profile.

To find out more about Barrick Gold, read Barrick Gold: Overview of the world’s largest gold mining company.

Latest articles

23 May

Trade War Subdues Manufacturing PMIs around the World

WRITTEN BY Mayur Sontakke, CFA, FRM

Today, IHS Markit published its purchasing managers' indexes or PMIs for May countries around the world.

Best Buy (BBY) reported better-than-expected earnings for the first quarter of fiscal 2020, which ended on May 4.

23 May

Why Apple Stock Is Down 2.7% Today

WRITTEN BY John Parker

On May 23 at 12:46 PM EDT, Apple (AAPL) was trading at $179.12 with a 2.0% loss for the day.

The CBOE Volatility Index has been sitting at very low levels for most of 2019.

23 May

Cannabis Stocks Fell Due to Trade Fears


On May 23, CannTrust (CTST) was trading nearly 4.1% lower, while Cronos Group (CRON) fell 3.3%.

US equity markets are in the red today amid the escalation in the US-China trade war.