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Barrick Gold versus Newmont: Comparing Miners in 2018 and Beyond

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Newmont Mining overtakes Barrick Gold in market cap

After more than doubling in 2016, Barrick Gold’s (ABX) stock price tumbled ~12.0% in 2017 and another 18.0% in 1Q18. Newmont Mining’s (NEM) stock price, on the other hand, gained 84.8% in 2016, 8.3% in 2017, and another 2.4% in the first quarter of 2018.

ABX’s mine issues led its stock price to fall since April 2017, when Newmont Mining started gaining over Barrick Gold in terms of market capitalization. In September 2017, Newmont Mining finally overtook Barrick Gold as the gold miner with the highest market capitalization.

While Newmont Mining has overtaken Barrick Gold in market cap, Barrick Gold still leads the way as far as annual production is concerned. As we’ll see later in this series, this scenario could change.

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Year-to-date performance

Newmont Mining’s (NEM) operating performance has been strong year-to-date (or YTD), and its stock price gained 2.2% until April 4, 2018. This gain is significant as the VanEck Vectors Gold Miners ETF (GDX) has lost 8.0% in the same timeframe, while the SPDR Gold Trust ETF (GLD) has returned just 1.0%.

Barrick Gold, on the other hand, has lost 17.6% during the same timeframe. Along with its 2017 results, Barrick Gold’s production and cost guidance for 2018 and beyond has been weaker than expected. This trend has led to its relative underperformance.

Senior and intermediate miners Kinross Gold (KGC), Yamana Gold (AUY), and Agnico Eagle Mines (AEM) also gave YTD returns of -12.1%, -19.5%, and -10.8%, respectively.

Series overview

In this series, we’ll compare Newmont Mining and Barrick Gold on various parameters including their strategies, production growth, cost profile, and balance sheet strength. We’ll also examine their reserve growth, analyst sentiment, and relative valuation. We’ll analyze the key differences between the companies and how their stock prices could progress going forward based on their fundamental attributes.

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