Barrick Upgrades Production Growth Guidance



Production growth

For miners, production growth is an important variable. Along with realized metal prices, production growth drives a company’s top line. Gold miners are trying to increase their production levels at minimal additional costs through productivity and operational enhancements. 

Barrick Gold’s (ABX) gold production has been slowly falling since 2011 due to asset sales and maturing mines. In this part of the series, we’ll see how the company is driving production growth.

In 3Q16, ABX’s gold production was ~1.4 million ounces, a fall of 17.0% year-over-year (or YoY). The fall was mainly due to asset sales in 2015 and 1Q16.

The company’s 3Q16 revenue was $2.3 billion, which is almost flat YoY. You should note that this is impressive since it comes on the back of a 17.0% fall in production over the same period. This was helped by higher gold prices, which rose ~19.0% in 3Q16 compared to 3Q15.

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Production guidance upgraded

Barrick Gold’s management has increased its 2016 gold production guidance from 5.0 million–5.5 million ounces to 5.25–5.55 million ounces. It maintained its guidance for copper production at 380 million–430 million pounds.

Barrick Gold’s peers

Barrick Gold’s peers (GDX) (GDXJ) are also trying to raise their production levels. Agnico-Eagle Mines (AEM), Goldcorp (GG), and Eldorado Gold (EGO) have stable production profiles. Kinross Gold (KGC) could have problems replacing its reserves in the long term.

There are various ways to invest in gold, including physically purchasing gold, investing directly in gold miners, and investing in gold ETFs. If you’re looking for exposure to gold, you can invest in the SPDR Gold Shares (GLD).

In the next part of this series, we’ll take a look at Barrick Gold’s cost guidance.


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