Barrick Meets Guidance, Benefits from Gold Market Tailwinds

Gold major Barrick Gold (TSX:ABX,NYSE:GOLD) reported a strong Q4 2019, noting that it has benefited from gold’s momentum over the last year as well as precious metals tailwinds.

2019 gold production reached 5.4 million ounces — the top end of the company’s yearly guidance — and copper output superseded Barrick’s target range, reaching 432 million pounds.

The positive showing in Q4, paired with gold’s price rally, grew Barrick’s quarterly dividend by 40 percent quarter-over-quarter.

The multinational miner’s Q4 results were discussed during a recent conference call. During the tele-meeting, President and CEO Mark Bristow recounted the progress the company has made since merging with Randgold Resources in late 2018.

“In the year since the completion of Barrick’s merger with Randgold Resources, we have transformed the new company while creating the world’s largest gold mining complex in Nevada in a transaction that had been unsuccessfully pursued for two decades,” said Bristow to those who tuned in.

The Nevada Gold Mines joint venture between Barrick and Newmont (TSX:NGT,NYSE:NEM) helped Barrick reach the midpoint of its North American production and cost guidance, and allowed it to achieve a quarter-on-quarter decrease in gold cost per ounce.

“We started the year with five tier one gold mines and ended it with six, thanks to the Nevada deal,” Bristow added. “We’ve also succeeded in replenishing our reserves and resources, net of depletion, at a higher grade.”

The international gold miner is also well on its way to meet its US$1.5 billion asset sale target by the end of 2020, a strategy Bristow employed to allow the company to focus on its higher-quality assets.

Part of Barrick’s mass asset sell off was its late 2019 deal with Teranga Gold (TSX:TGZ,OTCQX:TGCDF). Teranga has agreed to pay Barrick US$380 million for a 90 percent stake in the Massawa gold project located in Senegal.

News that the Senegalese government has granted key approvals needed for the deal to go through was announced on Thursday (February 13).

“Barrick and Teranga expect to satisfy the remaining conditions precedent to closing of the Transaction in the coming weeks, which include the granting by the Government of Senegal of an exploitation license and a residual exploration license for Massawa,” notes a press release.

All in all, Barrick is favorably positioned to continue benefiting from gold’s stellar performance, an idea that was reiterated in a CIBC (TSX:CM) research note that designates the miner an “outperformer.”

“Barrick is our preferred senior gold name,” reads the equity research report. “The company has achieved some success in realizing synergies from the Barrick-Randgold merger and Nevada (joint venture) with the improvement in reserves and resources at several assets.”

NYSE shares of the company are anticipated to climb from US$18.41 to US$24 over the next 12 to 18 months. Barrick’s shares on the TSX were up 3.3 percent on Thursday, trading at C$25.20.

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