Top 3 Sources of Value for Barrick Gold

June 3rd, 2011 by Trefis Team

Barrick Gold Corporation (NYSE:ABX) is the world’s largest pure gold mining company and is headquartered in Toronto, Ontario, Canada. The firm operates primarily in four regions – North America, South America, Australia Pacific and Africa. All four regions produce gold while copper is produced from the South American mines. The company’s new exploration projects span globally and include: Papua New Guinea, the US, Canada, Australia, Peru, Chile, Russia, South Africa, Argentina and Tanzania. It competes other mining companies such as Newmont Mining (NYSE:NEM), AngloGold Ashanti Ltd. (NYSE:AU), Goldcorp Inc. (NYSE:GG) and Freeport McMoran Copper (NYSE:FCX).

Below we look at what makes up our $66.79 price estimate for Barrick Gold, which is at a premium of 45% to the stock’s market price.

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3 Key Drivers for Barrick Gold Stock

1) North American Mines – represents 59% of the company’s stock value

The North American mines delivered close to 3.1 million ounces of gold in the year 2010. Of the 10 mines that are operational in the U.S. 7 of them are based in Nevada which also includes the flagship Goldstrike property. The mine group also consists of the all important Cortez mines, which is a relatively low cost production region, adding close to 1.1 million ounces in 2010.

See the top forecasts for North American Mines

2) South American Mines – 31%

The South American mines contributed more than 2 million ounces of gold to Barrick’s gold shipments. The region also produces gold at the lowest cash cost per ounce for Barrick Gold. The cost per ounce of gold produced in 2010 was $243.

See the top forecasts for South American Mines

3) Australian Mines  – 16.5%

The Australian region produces approximately 2.0 million ounces of gold every year. The Porgea mine in Papua New Guinea is the largest contributor to the region with approximately 0.55 million ounces of gold produced every year. This is one of the most expensive gold producing regions with the cash cost per ounce of gold produced more than $600.

See the top forecasts for Australian Mines

See our full analysis for Barrick Gold