Barrick Gold on Track to Meet US$1.5 Billion Sales Target

As Barrick Gold (TSX:ABX,NYSE:GOLD) keeps making moves to surpass its US$1.5 billion sales target, the company has now set its eyes on copper.

On Monday (November 18), Saracen Mineral Holdings (ASX:SAR,OTC Pink:SCEXF) agreed to buy Barrick’s 50 percent stake in the Kalgoorlie Consolidated Gold Mines (KCGM) joint venture. The sale will bring in US$750 million for Barrick, with the remainder still held by Newmont Goldcorp (TSX:NGT,NYSE:NEM).

“The sale of our non-operating interest in KCGM represents the first step in our plan to realize in excess of US$1.5 billion from the disposal of non-core assets by the end of next year,” said Mark Bristow, president and CEO of Barrick, in the announcement.  

“While this iconic gold mine has been a valuable contributor to Barrick over the years, the asset does not fit with our strategy of operating mines that we own. The sale allows us to further focus our portfolio on core operations,” he added.

In a report released on Monday afternoon, analysts at Raymond James stated that the sale of KCGM, which is expected to be completed in Q4 2019, shows that Barrick continues to believe it is one track to realize its US$1.5 billion sales target.

According to Bristow, Barrick’s future may focus on copper in an effort to satisfy the growing number of investors who screen miners based on environmental, social and governance guidelines and who want to capitalize on the growing demand for copper in low-carbon technology. 

“If you really believe in less carbon, lower carbon footprints and a more modern economy and lifestyle for humanity on this planet, you have to believe in copper,” he told Reuters.

Barrick currently has stakes in three copper mines: a 100 percent stake in Zambia’s Lumwana mine, a 50 percent stake in the Zaldivar mine in Chile and a 50 percent stake in the Jabal Sayid mine in Saudi Arabia.

Analysts have been forecasting an increase in demand for copper in the coming years, with Wood Mackenzie predicting copper consumption will grow by 250 percent by 2030, largely due to the expected implementation of 20 million electric vehicle (EV) charging points, which require copper. 

Similarly, analysts polled by FocusEconomics believe the medium-term outlook for copper is bright as refined production will lag behind usage due to limited production capacity and increasing demand for copper in new technology like EVs.

Since the announcement of the sale, Barrick’s share price has inched up. From market open on Monday, it has increased by 3.52 percent, going from C$21.90 to C$22.67. 

As of 10:32 a.m. on Tuesday (November 19), Barrick’s share price was at C$22.40. Meanwhile on Monday, copper was at US$5,827.50 per metric ton on the London Metal Exchange. 

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Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.