After Continuous Decline For 3 Years, What Is Driving 20% Growth In Barrick’s Gold Shipments?

Barrick Gold (NYSE: GOLD) gold shipments refers to the volume of physical gold shipped/sold by the company from its gold mining operations in the United States, Latin America, and Africa. The company’s proven and probable gold reserves stood at 62.3 million ounces at the end of 2018.

You can view the Trefis dashboard – Barrick Gold’s Gold Volume: Why Is Gold Shipment Set To Rise >20%, And What Does This Mean For Barrick Gold? – to understand the annual and quarterly trends in Barrick’s gold shipments and what is driving this change.

What Happened?

• Gold shipments are likely to increase by 21% in 2019, as against a sharp decline of 14.3% in 2018 and a declining trend over the last 3 years.
• As against a cumulative decrease of 1.54 million ounces in gold shipments between 2015 and 2018, shipments are expected to rise by about 1 million ounces in just one year, in 2019.
• During the first nine months of 2019, gold shipments saw a sharp rise of 22% to 4.1 million, taking the full year estimate to 5.5 million ounces, compared to 4.5 million ounces in 2018, marking a growth of 21%.

Why?

• Historically, annual and quarterly shipments have moved in tandem with gold production trends.
• Production is set to increase by 21.6%, from 4.5 million ounces in 2018 to 5.5 million ounces in 2019.
• Barrick’s acquisition of Randgold Resources in January 2019, has led to an increase in the company’s gold mines, reserves, and total production.
• As against a cumulative decrease of 1.59 million ounces in gold production between 2015 and 2018, production volume is set to rise by about 1 million ounces in just one year, in 2019.

So What?

• A sharp rise in volume produced and sold, due to the Goldcorp acquisition, is expected to lead to a 30% increase in the company’s gold revenues, which could increase from $6.6 billion in 2018 to $8.6 billion in 2019.
• Higher gold revenue is also expected to lead to an increase in the share of gold revenues to the company’s total revenue from 91% in 2018 to 93% in 2019.

To understand how a rise in gold shipments could affect Barrick Gold’s revenues, refer to the following Trefis analysis- Barrick Gold Revenues: How Does Barrick Make Money?

Comparing Barrick Gold and Newmont Goldcorp

• Barrick Gold and Newmont Goldcorp have seen opposite trends in their gold shipments.
• While Barrick’s gold shipments declined from 6.1 million ounces in 2015 to 4.5 million ounces in 2018, Newmont’s gold shipments increased from 5.1 million ounces to 5.5 million ounces during the same period.
• With both gold giants seeing major deals in 2019, they are expected to see sharp rises in gold sales for the year.
• However, Newmont’s gold volume is expected to see a sharper rise with the company expected to maintain its leadership position in the gold market.

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