Barrick Gold [stock_market_widget type="inline" template="generic" color="default" assets="ABX.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has got off to a nice start for the first quarter of 2019 as its latest production numbers show. The company’s first-quarter production was driven by the Kibali mine, where Barrick Gold witnessed record production last year. Let’s see what Barrick Gold’s first-quarter performance looks like and what should investors can expect going forward.
The First Quarter Numbers
Barrick Gold’s first-quarter sales stood at 1.37 million ounces of gold, according to a press release issued by the company. Additionally, Barrick also sold 103 million pounds of copper. The company produced 1.37 million ounces of gold and 106 million pounds of copper during the quarter, which was in line with its own guidance for the quarter.
What’s more, Barrick Gold’s average realized gold price for the quarter stood at $1,304 an ounce, while the average copper price was $2.82 per pound. The company is all set to release its complete results on May 8, and investors can expect a solid performance from the company given its preliminary production and pricing numbers.
That’s because in the first quarter of 2018, Barrick Gold’s production stood at 1.05 million ounces, while copper production was 85 million pounds. However, the prices of copper and gold were higher during the first quarter of 2018, so Barrick’s results would be tempered to some extent by the lower pricing this time.
But investors shouldn’t lose confidence in Barrick Gold as the company looks all set to boost its performance as the year progresses, driven by an improvement in gold prices as well as higher production.
What Next for Barrick?
Barrick Gold has made a couple of smart moves at the beginning of the year to ensure that it can take advantage of an increase in gold prices. First, it acquired Randgold Resources to boost its production profile, which is why its output will be higher substantially on a year-over-year basis in 2019.
That was a smart move from Barrick as it is now sitting on more resources, which will come in handy in the long run as discoveries are declining.
The next smart move made by Barrick was to strike a joint venture with Newmont Mining in Nevada to create a joint venture and realize synergies by integrating their operations in that area. The good part is that both these moves will boost Barrick Gold going forward because they will result in higher production and lower costs.
The combination of Barrick and Newmont in Nevada will create annual pre-tax synergies of $500 million within the first five years of the closing of the transaction, apart from creating $5 billion in pre-tax net present value over the next couple of decades. Barrick will be the bigger beneficiary over here as it holds a 61.5% stake in the Nevada joint venture.
Meanwhile, it is likely that the price of gold will test new highs going forward on the back of favourable macroeconomic developments. As such, Barrick Gold’s financial performance should keep improving as the year progresses and help the stock deliver more upside.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.
