Key Takeaways From Barrick Gold’s Q4 2017 Results

by Trefis Team
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Barrick Gold (NYSE: ABX) reported its 4th quarter and full year 2017 results on 14th Feb and conducted a conference call with analysts the following day. The company was in line in meeting its market estimates by reporting an adj-EPS of $ 0.22. However, Barrick reported a net loss of $314 million in Q4 as a result of an impairment charge reported this quarter due to the reclassification of its reserves at the Pascua-Lama project located on the border between Argentina and Chile. Going forward, Barrick is expected to report lower revenues due to its falling reserves which would negatively impact its output and earnings.

We have summarized the company’s major highlights from its Q4 results and the company’s outlook for 2018 in our interactive platform.

Barrick’s revenue in Q4 2017 was down by 4% year-on-year (Y-o-Y) largely due to a lower gold production volume. However, EPS (Non-GAAP) remained at a similar level as that of Q4 2016.

The company’s operations benefited from lower cash costs in 2017. Cash cost per ounce declined by 4% Y-o-Y in 2017. Lower cash costs reflect the company’s ongoing focus on driving productivity and efficiency improvements across their portfolio of assets.

However, the company’s performance in the upcoming year is expected to slack as a consequence of its falling reserves which is going to negatively impact its revenue. Barrick’s total gold output is expected to be 11% lower than its production volume in 2017. (assuming the mid-point of the company’s 2018 guidance) Lower production volume would, in turn, imply a higher per ounce cost which is going to be further exaggerated with an increasing cost due to high-cost inventory and higher costs at Acacia.

Nevertheless, the company plans to mitigate the impact of falling reserves by increasing its capital spend on project development by more than 60 percent in 2018. However, a lower production and higher cost guidance have resulted in a negative sentiment for Barrick among its investors. Barrick’s stock price fell by ~3% since the announcement of its Q4 results, despite meeting target estimates.

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