Why Quality Over Quantity Is The Mantra For Barrick Gold Going Forward

June 15th, 2016 by Trefis Team

Barrick Gold has taken a series of actions over the course of the past couple of years that have put the company in a good position to benefit from the recovery in gold prices this year and going forward. In response to the decline in gold prices over the past few years, the company has prioritized cost and debt reduction. An important constituent of the company’s strategy to rationalize costs and debt has been the sale of non-core mines, which essentially have higher all-in sustaining costs (AISC) as compared to the average figure for Barrick’s overall gold mining operations. Whereas the sale of these non-core mines has affected Barrick’s estimated production figures for 2016 and the next couple of years, it has also meant that the company’s overall costs will remain low, as indicated by the decline in the AISC metric shown below. The AISC metric is a composite figure of the total costs pertaining to mining operations which incorporates both production costs and sustaining capital expenditure.

Quality Over Quantity

The company management has stated that the sale of high-cost mines is one of the options that it continues to consider in 2016 for paying off debt and lowering overall costs. Thus, quality over quantity seems to be the mantra for Barrick going forward, at least for the next couple of years. Given the ongoing recovery in gold prices, it would certainly stand the company in good stead.

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Have more questions about Barrick Gold? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Barrick Gold

 

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