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What’s Driving Production Growth for Barrick Gold?

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What’s affected ABX’s production?

Production growth is a crucial variable for miners. Along with realized metal prices, it drives a company’s top line. Barrick Gold (ABX) produced ~1.15 million ounces of gold in the third quarter, a fall of ~7.0% YoY (year-over-year). While the annual decline was expected, the company’s production improved sequentially by 7.4%.

Improved throughput and grades at Barrick Nevada and the completion of debottlenecking improvements at Pueblo Viejo aided this improvement.

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Future production

Barrick Gold expects its fourth-quarter gold production to come in at 1.25 million ounces and its full year production to trend toward the lower end of the guidance range of 4.5 million–5.0 million ounces. The midpoint of this guidance implies a fall of ~11.0% compared to its actual production in 2017. This guidance report marks the company’s eighth straight annual fall in production.

The fall is mostly the result noncore asset sales, as the company is now focusing on maximizing its profitable production.

Barrick Gold’s peers

Barrick Gold’s peers (GDX) (GDXJ) are also focusing on maximizing profitable production by optimizing their asset portfolios. Agnico Eagle Mines (AEM) and Goldcorp (GG) have stable and increasing production profiles, respectively. AngloGold Ashanti (AU) and Coeur Mining (CDE), on the other hand, could have some issues replacing their reserves over the long term.

In the next part of this series, we’ll look at Barrick Gold’s unit costs.

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