Q1 Gold Results Are In - Key Takeaways from Top Miners

COVID-19 has had a major impact on all types of miners, and investors have been waiting for first-quarter results to come out so they can begin to gauge the effects of the virus. 

In the gold space, a slew of major companies have reported Q1 numbers over the past week, and below the Investing News Network has gathered highlights from the three top gold miners by market cap.

Newmont (TSX:NGT,NYSE:NEM), Barrick Gold (TSX:ABX,NYSE:GOLD) and Agnico Eagle Mines (TSX:AEM,NYSE:AEM) have all pulled their production guidance for the year, although interestingly only Newmont and Agnico Eagle did so due to COVID-19 developments.

Barrick was a different story, and lowered its expectations after having to shut down the Porgera gold mine in Papua New Guinea, which it owns jointly with China's Zijin Mining Group (OTC Pink:ZIJMF,SHA:601899). The situation at that asset remains in flux. 

Overall the production reductions have so far not been drastic, but some experts have suggested that Q2 results will tell the real story about gold output. That means there may be more fallout later. 

It's also worth noting that despite those reductions and despite the turmoil seen due to the coronavirus, all three miners have seen share price increases this year, with Newmont and Barrick currently up around 60 percent. Their moves came after gold's precipitous drop in March, lending credence to the oft-repeated idea that miners are among the first to rise when the price of the yellow metal starts to go up.

Analysts appear optimistic about Newmont, Barrick and Agnico, with the first two receiving praise for their balance sheet strength and Agnico, the hardest hit by the COVID-19 outbreak, getting positive reviews for its plans to get its operations up and running at full speed once again.

Read on to learn more about how these three top gold miners performed in Q1.

1. Newmont

Market cap: C$71.94 billion; Share price: C$90.25; Year-to-date move: +60.76 percent

Newmont's Q1 production results

Newmont shared its first-quarter results on Tuesday (May 5), reporting the following gold output stats:

• Q1 2020 production: 1.5 million attributable ounces.
• Original 2020 guidance: 6.4 million attributable ounces.
• New 2020 guidance: Not released yet; guidance withdrawn on March 23.

Though Newmont has not yet offered new production guidance for 2020, it said in its results release that "operations representing approximately 90 percent of (its) planned 2020 production are operating." Two sites are currently on care and maintenance.

Newmont's Q1 financial results

In the release, Newmont highlights its ability to adapt to COVID-19 challenges, which it credits in part to its positive financial numbers.

"Our robust balance sheet provides us with significant financial flexibility to continue allocating capital where it is needed most during this time of uncertainty, while maintaining our industry-leading returns to shareholders" — Tom Palmer, president and CEO of Newmont.

Key financial figures from the company are as follows:

• Revenue: US$2.58 billion
• Net income: US$837 million
• Adjusted net income: US$326 million
• Free cash flow: US$611 million

Analyst soundbites on Newmont

Market watchers following Newmont offered largely positive commentary after its Q1 results came out.

"Newmont's Q1 results were in line, and guidance remains suspended. As a result, the impact to our estimates was minimal and we maintain our Outperform rating and our US$62 target price" — Jackie Przybylowski, BMO Capital Markets.

Analysts at Raymond James also have an "outperform" rating for Newmont, in part due to its its "solid cash flow" and balance sheet strength.

"Given Newmont uses $1,200/oz gold for planning purposes and given gold prices as well as oil prices and currencies have moved in a favourable direction relative to Newmont's plans we continue to expect Newmont to generate meaningful free cash flow this year" — Brian MacArthur and Chris Law, Raymond James.

2. Barrick Gold

Market cap: C$67.83 billion; Share price: C$38.15; Year-to-date move: +58.96 percent

Barrick Gold's Q1 production results

Barrick Gold's results for Q1 came out on Wednesday (May 6), with the company reporting the following numbers for gold production:

• Q1 2020 production: 1.25 million attributable ounces.
• Original 2020 guidance: 4.8 to 5.2 million attributable ounces.
• New 2020 guidance: 4.6 to 5 million attributable ounces.

As mentioned, Barrick issued new guidance for 2020 after having to take Porgera offline. In terms of long-term output, the company emphasized that its 10 year plan requires a strong asset foundation.

"Our long-term strategy prizes quality above quantity, hence its focus on Tier One assets. We define a Tier One mine as one that will produce at least 500,000 ounces per annum, has a life of more than ten years and total cash costs per ounce8 at the lower half of the industry range. The fact that we have six of these mines in our portfolio is the surest guarantor of our ten-year production forecast" — Barrick President and CEO Mark Bristow.

Barrick Gold's Q1 financial results

In its report, Barrick points to its financial success even in the face of COVID-19, giving the sale of the Massawa gold project in Senegal as one example. According to the company, it created immediate value for itself and its shareholders.

Key financial figures from the company are as follows:

• Revenue: US$2.72 billion
• Net income: US$663 million
• Adjusted net income:
• Free cash flow: US$438 million

Analyst soundbites on Barrick Gold

BMO Capital Markets has an "outperform" rating on Barrick with a share price target of US$26.

"Barrick reported Q1 results in line with expectations and it continues to progress value-creating activities across its asset portfolio consistent with previous guidance (allowing for some slippage due to COVID-19, which is not unexpected)" — Jackie Przybylowski, BMO Capital Markets.

Barrick also has an "outperform" rating at Raymond James; the firm has a higher share price target for the company than BMO at US$32. Raymond James points to Barrick's "numerous high-quality gold mines and copper assets," as positive attributes, saying they allow it to generate strong cash flow.

"Barrick continues to expect gold production in the 2H20 to be higher than 1H20 and expects gold production in 2Q20 to be lower than 1Q20 based on mine sequencing, maintenance shutdowns, COVID-19 impacts in Argentina and the stoppage at Porgera" — Brian MacArthur and Chris Law, Raymond James.

3. Agnico Eagle Mines

Market cap: C$22.04 billion; Share price: C$91.72; Year-to-date move: +16.13 percent

Agnico Eagle Mines' Q1 production results

Agnico Eagle Mines reported its first-quarter results last Thursday (April 30). As mentioned, of the three miners discussed here, it was the hardest hit by COVID-19 — it faced shutdowns at a number of operations, including the massive Canadian Malartic mine. Canadian Malartic is jointly owned by Agnico Eagle and Yamana Gold (TSX:YRI,NYSE:AUY).

Even so, the company appears confident it is getting back on track and reported these gold production numbers for the first quarter of the year:

• Original 2020 guidance: 1.875 million ounces.
• New 2020 guidance: 1.63 to 1.73 million ounces.
• Q1 2020 production: 411,366 payable ounces.

"Furthermore, despite the temporary shutdowns required to manage COVID-19, substantial progress was made in the first quarter at our LaRonde, Meliadine and Amaruq operations. As a result, we expect to have a strong second half this year with quarterly gold production expected to return to levels similar to the fourth quarter of 2019" — Agnico Eagle CEO Sean Boyd.

Agnico Eagle's Q1 financial results

Boyd also weighed in on Agnico Eagle's finances, pointing investors toward the second half of the year.

"Given the strong gold price and much weaker local currency environment than budgeted, we anticipate generating significant free cash flow in the second half of 2020. In addition, our dividend has remained unchanged and we declared a quarterly dividend of $0.20 per share" — Agnico Eagle's Boyd.

Key financial figures from the company are as follows:

• Revenue: US$671.88 million
• Net loss: US$21.6 million
• Adjusted net income: US$56 million

Analyst soundbites on Agnico Eagle Mines

Unsurprisingly, analyst commentary on Agnico Eagle has focused on its recovery from coronavirus-induced mine closures and slowdowns.

"Agnico Eagle has laid out a clear path to improvement at the operations — both on startup and technical challenges as well as COVID-19 related disruptions. The company has provided revised 2020 guidance and appears confident of a restart across Quebec, Mexico, and Nunavut in Q2" — Jackie Przybylowski, BMO Capital Markets

Both BMO Capital Markets and Raymond James have "outperform" ratings on the company, with the former setting its price target at US$60 and the latter calling for its share price to reach US$62.

"AEM provided encouraging updates on the operating issues it experienced at the start the year. At La Ronde, AEM completed the ground support work in 1Q and resumed mining activities at the higher-grade West mine area in 2Q. At Meliadine, replacement parts for the apron feeder were secured in 1Q and mill throughput is expected to ramp up to normal levels by the end of 2Q" – Farooq Hamed and Judith Elliot, Raymond James.

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