Barrick Gold’s merger with Randgold
Barrick Gold (GOLD) announced its merger with Randgold Resources on September 24. Due to the perceived synergies, both the stocks gained after the news. Between the announcement of the merger and the end of December, GOLD’s stock had gained 29%, outperforming the VanEck Vectors Gold Miners ETF (GDX), which gained 12% in the same period.
Barrick Gold’s underperformance YTD
Year-to-date (or YTD), however, the stock fell 1.3% compared to GDX’s gain of 7.2%. Peers Goldcorp (GG), Kinross Gold (KGC), Yamana Gold (AUY), and Agnico Eagle Mines (AEM) have also outperformed GOLD with YTD gains of 13.9%, 6.2%, 19.1%, and 8.2%, respectively. In contrast to GOLD’s loss, the S&P 500 (SPY) and the Dow Jones Industrial Average Index (DIA) have risen by 8.2% and 7.8%, respectively.
The initial euphoria around the merger seems to be over, and now analysts and investors are waiting for actual benefits and its execution plan before they turn more positive on the stock. It is in this context that Barrick’s upcoming Q4 2018 earnings release is important. Barrick Gold is scheduled to release its results on February 13 before the market opens.
Barrick Gold pre-released production
Barrick Gold (GOLD) started pre-releasing its production in the third quarter of 2017. The company pre-released its Q4 2018 production on January 21. Its production for 2018 came in at 4.53 million ounces, which is in-line with its guidance range of 4.5–5.0 million ounces and implies fourth-quarter gold production of 1.26 million ounces. Barrick Gold and Randgold Resources’ merger completed on January 1, 2019. Therefore, GOLD’s 2018 and Q4 2018 results don’t include Randgold’s results.
In the next part, we’ll see what to look forward to in Barrick’s Q4 2018 earnings release.