Barrick Gold: Good News Overshadowed by Falling Gold Price

October 24th, 2011 by Trefis Team

It has been a promising and eventful past week for Barrick Gold Corporation (NYSE:ABX). While the company has been raking in profits as a result of the elevated gold price throughout the third quarter, the recent drop in commodities has dragged its stock down along with competitors Newmont Mining (NYSE:NEM) and Freeport McMoran Copper(NYSE:FCX). The company’s African arm, African Barrick Gold, recently announced record profits. Quarterly revenues were $345 million, up 60 percent from Q3 2010. The company also posted a net profit of $102 million for the quarter, up 156% year-on-year basis. The average realized price of gold touched a record high of $1,772 per ounce. [1] We believe that these results are indicative of the robust earnings that we can expect Barrick Gold to report on a consolidated basis this quarter.

See our full analysis for Barrick Gold here.

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Barrick also added two new mining zones to its Cortez mines in Nevada. [2]  The new discoveries – Red Hill and Gold Rush – add more than 3.5 million ounces of gold as an inferred resource to Barrick’s portfolio. The findings come on account of the planned drilling and exploration program, budgeted at $26 million.

Lastly, in a separate development, Barrick settled a defamation lawsuit against the author and publisher of the book “Noir Canada: pillage, corruption et criminalite en Afrique” (Black Canada: pillage, corruption and criminality in Africa), which discusses Canadian companies’ actions in Africa. [3] The publishers have reportedly agreed to pay a significant amount to Barrick Gold.

Our $59 price estimate for Barrick Gold is roughly 20% above the market price. 

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Notes:
  1. ABG Third Quarter Results, Barrick Gold Press Release, Oct 2011 [↩]
  2. Barrick Discovers Two New Gold Zones at Cortez, Engineering and Mining Journal, Oct 2011 [↩]
  3. Barrick Settles Defamation Lawsuit Against Author and Publisher, Canadian Business, Oct 2011 [↩]