Barrick Gold’s Merger Could Drive Its Production Going Forward



What impacted Barrick Gold’s production?

Production growth is a crucial variable for miners. Along with realized metal prices, production growth drives a company’s top line. Barrick Gold (GOLD) produced 1.26 million ounces of gold in the fourth quarter—a fall of ~6.0% YoY (year-over-year). The company’s 2018 annual production was 4.53 million ounces, which is in line with its guidance range of 4.5 million–5.0 million ounces. However, the production fell 15% compared to 2017.

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Future production

Barrick Gold completed its merger with Randgold on January 1. Read Is Barrick Worth a Look after Its Merger with Randgold? to learn more. The combined company is expecting to produce 5.1 million–5.6 million ounces of gold in 2019, which implies 18% growth at the mid-point of the guidance range. In the second half of 2019, the production is expected to be slightly higher than the first half of the year.

Including 2018, Barrick Gold has reported lower annual production for eight consecutive years. Barrick Gold’s declining production profile was one of the motivations to make a deal with Randgold. The fall is mainly due to non-core asset sales. The company is 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) could have some issues replacing their reserves over the long term.

Next, we’ll discuss Barrick Gold’s unit costs.


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