Investors Should Know These Updates from Barrick Gold in 2Q16


Dec. 4 2020, Updated 10:52 a.m. ET

Debt reduction

Barrick Gold (ABX) is trying to reduce its debt to maintain an optimal leverage ratio to be able to weather the current volatile metal price environment. The company is targeting debt reduction of $2 billion in 2016, and it has already achieved 42% of this target through the sale of its Nevada assets year-to-date.

Any further progress on debt reduction in 2016 would be worth watching closely for investors. Barrick Gold still remains highly leveraged compared to its peers (GDX) Goldcorp (GG), Kinross Gold (KGC), Yamana Gold (AUY), and Agnico Eagle Mines (AEM).

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Projects pipeline and free cash flow generation

Investors will also be looking forward to Barrick’s update on its internal project growth pipeline. The company has stated that it will strive to present to the investment committee only those projects that show potential to add significant value. It will be interesting to watch out for any updates on these projects.

Barrick Gold delivered FCF (free cash flow) of $181 million in 1Q16, making it the fourth consecutive quarter of positive FCF. Barrick Gold’s management has defined value creation for shareholders in terms of FCF per share.

During the 1Q16 earnings call, Barrick’s management mentioned that by continuously improving and innovating, it can expand the company’s margins, which will support its objective to grow FCF per share. This positive FCF trend should continue in 2Q16, with precious metal prices remaining strong during the quarter.

In the next part, we’ll look at cost-reduction initiatives and project pipelines.


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