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Which Gold Miners Offer Free Cash Flow Upside in 2019 and Beyond?

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Free cash flow

In the first quarter, Barrick Gold’s (GOLD) FCF (free cash flow) fell 19% YoY (year-over-year) to $146 million, and its operating cash flow rose 2.6% YoY to $520 million. Its FCF was lower due to its higher capex.

In 2019, Barrick Gold plans to focus on improving productivity, driving down operating costs, and reducing working capital. As a result of these efforts, it expects its FCF to improve.

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Consistently delivering FCF

Newmont Goldcorp (NEM) generated $349.0 million in FCF in the first quarter compared to $35 million in the first quarter of 2018. This increase was mainly due to the completion of underground development projects in Africa and North America.

FCF generation

Kinross Gold (KGC) has generated negative FCF over the last few quarters, mainly due to its higher capex. In the first quarter, it generated negative FCF of $13.2 million. The company is advancing project financing of $300 million for Tasiast, which it expects to complete in the second half of the year.

Agnico Eagle Mines (AEM) has been generating negative FCF for the last few quarters due to high capex, as its projects have been ongoing. Going forward, however, the company’s capex should fall due to project completions. Moreover, new projects will lead to higher earnings, contributing to higher FCF. Analysts expect the company to generate positive FCF of $131 million this year. Its FCF is expected to grow another 267% and 40% YoY, respectively, in 2020 and 2021.

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