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No Respite for Barrick Gold after Its Q2 Earnings, Slides Further

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Jul. 30 2018, Published 5:50 p.m. ET

Barrick Gold’s Q2 2018 miss

Barrick Gold (ABX) reported its second-quarter earnings on July 25 after the market closed and held its conference call the next day. The company reported adjusted EPS of $0.07, which missed analysts’ expectations by $0.04. 

ABX’s revenues totaled $1.71 billion during the second quarter, which also missed expectations by 6.0%. This trend is in contrast to the company’s first-quarter earnings beat.

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Lower sales and higher costs

Barrick Gold’s second-quarter miss was primarily due to lower gold sales and higher maintenance and fuel costs. Its second-quarter gold production totaled 1.07 million ounces, down 24.0% year-over-year (or YoY). Copper production dropped 20.0% YoY to 83.0 million pounds. 

Barrick Gold’s all-in sustaining costs (or AISC) rose 20.0% YoY to $856 per ounce in the second quarter. Barrick maintained its full-year production and cost guidance at 4.5 million–5.0 million ounces at its AISC of $765–$815 per ounce.

Stock momentum weak

Barrick Gold stock closed down 6.1% on July 26, resulting from the earnings miss and the lack of any major positive catalysts from the call. ABX stock is trading with a year-to-date decline of 23.0%. 

ABX’s peers (GDX) Goldcorp (GG) and Agnico Eagle Mines (AEM) also released their second-quarter earnings on July 25. These companies also missed analysts’ expectations. 

Newmont Mining (NEM) reported its results on July 26 and reported an earnings beat. On July 26, GG and AEM were trading 6.3% and 5.3% lower, respectively, while NEM rose 0.9%.

Series overview

In this series, we’ll look at Barrick Gold’s recent results as well as what they mean for the company’s future. We’ll also look at its second-quarter earnings call and management’s comments. Then we’ll examine the company’s production and cost performance.

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