Barrick’s Q2 2018 miss
Barrick Gold (ABX) reported its Q2 2018 earnings yesterday after the market closed. The company reported adjusted EPS of $0.07, which missed analysts’ expectations by $0.04. Its revenues amounted to $1.71 billion, which missed expectations by 6.0%. The results stood in contrast to the company’s Q1 2018 earnings beat. The stock’s momentum in after-hours trading was weak after the miss.
Lower sales and higher costs
Barrick’s Q2 miss was mainly due to lower gold sales and higher maintenance and fuel costs. Its second-quarter gold production was 1.07 million ounces, down 24% year-over-year (or YoY) while copper production dropped 20% YoY to 83 million pounds. All-in sustaining costs (or AISC) rose 20% YoY to $856 per ounce in Q2 2018. Barrick maintained its full-year production and cost guidance at 4.5 million–5.0 million ounces at AISC of $765–$815 per ounce. It expects production and costs to increase over the second half of this year, which should be supported by stronger performance at Barrick Nevada and Pueblo Viejo.
Further stock momentum
Based on further positive drill results, it also announced a new high-grade gold discovery at Fourmile, Nevada. The company also allocated additional funding for drilling at the project over the rest of 2018.
Barrick’s stock remained weak in 2018 year-to-date, mainly due to ongoing issues with the Tanzanian government. The course of the stock for the rest of the year could depend on a favorable resolution to the Tanzanian mine woes and a positive update regarding future production growth. We’ll get more of a sense of that outlook during the earnings call. In Upcoming Updates in Barrick Gold’s Q2 2018 Earnings Call, we highlighted the key topics Barrick could address in its earnings call.