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Can Barrick Gold’s Underperformance Reverse in 2018?

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Feb. 28 2018, Published 2:28 p.m. ET

Barrick Gold’s underperformance

Barrick Gold’s (ABX) stock had fallen 15.8% year-to-date (or YTD) as of February 23—an underperformance, given the -5.5% return from the VanEck Vectors Gold Miners ETF (GDX). The SPDR Gold Shares ETF (GLD), which provides access to the physical gold prices, has gained 2.0%. ABX’s close peers Newmont Mining (NEM), Goldcorp (GG), and Agnico Eagle Mines (AEM) have returned 3.1%, 0.5%, and -12.2%.

Barrick’s underperformance has been continuing since 2016. Its stock lost 9.4% in 2016, compared to a gain of 11.1% in GDX. Barrick’s weak operational results, as well as issues at its mines, led to this underperformance.

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Barrick’s results and investor day

Barrick reported its 4Q17 results on February 14, and it held a conference call the next day. The company’s earnings were in line with expectations, but its guidance was weaker than expected, so its stock slipped 2.3% on February 15. Its 2018 guidance for production and unit costs were weaker than the market expected.

On February 22, the company held its investor day. It outlined the projects that could drive its long-term growth. The company also mentioned that it wouldn’t complete the acquisition just for the sake of ounces.

Series overview

In this series, we’ll discuss Barrick’s recent results as well as what they mean for its prospects. We’ll also discuss the company’s 4Q17 earnings call and management comments. We’ll examine the company’s production and cost performance, too. We’ll look at the company’s investor day comments and try to put them in the context of its long-term goals.

We’ll start by looking at Barrick Gold’s CEO’s comments regarding future growth and acquisitions in the next part of this series.

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