Can Barrick Gold Reverse Its Year-to-Date Performance in 4Q17?



Barrick Gold’s underperformance in 3Q17

As we saw in the previous part of this series, Newmont Mining (NEM) has outperformed the benchmark index in 3Q17 on the strength of its operational performance. However, Barrick Gold (ABX) has underperformed its peers (GDX) (GDXJ) by gaining just 1.1% versus the 4.0% gain recorded by GDX. ABX announced a slight beat in its 2Q17 earnings.

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Pre-releasing production

Barrick Gold (ABX) has started pre-releasing its production results from 3Q17. It reported the production results for 3Q17 on October 12, 2017. ABX reported a decline in quarterly output at its major gold mines, which was expected due to the ongoing disruptions at its Tanzanian mines. 

Barrick Gold maintained its annual targets despite the production loss due to the mine issues. Barrick reported production of ~1.2 million ounces in 3Q17, down from ~1.4 million in 3Q16. The company is expecting higher production and lower costs in 4Q17.

Mine issues

Argentinean authorities lifted the restrictions on Barrick Gold’s heap leach facility, relieving it of months of production loss. However, the issues at its majority-owned Acacia’s Tanzanian mines are still ongoing. 

The Tanzanian government’s ban on mineral exports from the country has been affecting the company’s sentiment. It wants more gold to be processed within the country and has banned concentrate exports. Any impact on production or sales of its subsidiary would also impact Barrick Gold’s overall production.

Investors could anticipate comments by the company’s management on its anticipated action in Tanzania and how it could impact its overall production and costs.

Overall, Barrick Gold’s production growth is not expected to keep pace with its peers, including Newmont Mining (NEM), Agnico Eagle Mines (AEM), and Goldcorp (GG). However, that is not the company’s focus. Instead, it’s aiming for value over volume.


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