Asset sales boost Barrick Gold

Falling gold prices weigh on results, but the firm is nearing its debt-reduction target.

Kristoffer Inton 10 August, 2015 | 5:00PM

 Barrick Gold's (ABX) second-quarter results were in line with our expectations, as the company produced 1.45 million ounces at an all-in sustaining cost (AISC) of $895 per ounce (all figures are in U.S. dollars unless otherwise noted).

The company lowered its full-year production guidance to 6.1-6.4 million ounces from 6.2-6.6 million ounces, reflecting previously announced divestitures. It lowered full-year AISC guidance to $840-$880 per ounce from $860-$895 per ounce, as costs are likely to fall in the next two quarters. We expect full-year AISC slightly below the low end of guidance thanks to cost-cutting efforts. The company also announced it is cutting its quarterly dividend from $0.05 to $0.02, which may be prudent, given the fall in gold prices.

Last week, Barrick sold a 50% stake in its Chilean copper mine Zalvidar to Antofagasta PLC for $980 million in cash on closing and $25 million per year for the next five years. The partners will operate the mine together, leveraging Antofagasta's experience in the country. Given our tepid outlook for long-term copper prices, we think Barrick received more than fair value.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Barrick Gold Corp29.96 CAD0.54

About Author

Kristoffer Inton

Kristoffer Inton  Kristoffer Inton is an equity analyst for Morningstar, covering gold, coal and cement companies. Before joining Morningstar in 2013, he was an investment banking associate for Guggenheim Securities in New York. He holds a bachelor’s degree in finance with high honours from the University of Illinois.

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