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Gold/Mining/Energy : Barrick Gold (ABX)

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From: Savant3/22/2017 1:52:55 PM
   of 3558
 
Successful Debt Reduction Efforts To Stand Barrick In Good Stead Amid Subdued Gold Pricing Environment

1:04 PM ET 3/21/17 | TREFIS
Barrick Gold hasdelivered on its debtreduction targets for 2016, following on from another successful year of debt reduction in 2015. The company managed to lower its net debt by roughly$2 billion over the course of 2016, as promised by the management last year, following on from around $3 billion worth of debt reduction in 2015.



Given thedecline in gold prices from 2013 to 2015, the company management made debt reduction a priority,besides endeavoring to lower operating costs.Using the proceeds of a number of non-core asset sales and cash flows from operations, the company managed to accomplish the aforementioned debt reduction objectives. In addition to lowering debt, the sale of high-cost non-core mines helped lower Barrick’s average operating costs as well. Through a combination of asset sales and operational improvements, Barrick has managed to considerably lower its all-in sustaining costs (AISC) metric, which represents the overall costs required to sustain ongoing mining operations.



The success of Barrick debt and cost reduction efforts has prompted us to revise the company’s price estimate to $18.29. Lower debt levels and an improved AISC metric will certainly stand the company in good stead, given thatgold pricesare likely to average lower this year, as compared to last year. Strengthening economic conditions in the U.S. and the likelihood of more interest rate hikes by the Fed later this year are likely to weigh ongold prices. Thus, Barrick Gold has made the right moves to counteract the negative impact of lower gold prices.

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

  • Why Barrick’s Gold Production Declined In 2016
  • Gold Prices To Average Lower This Year As Fed Maintains Interest Rate Hike Outlook
Notes:

1) The purpose of these analyses is to help readers focuson 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 precisefigures, please referto our complete analysis for Barrick Gold
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BARRICK GOLD'S IMPROVED 5-YEAR OUTLOOK LEADS TO UPGRADE

11:00 AM ET 3/16/17 | S&P Capital IQ

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Stephen Walker of RBC CapitalupgradedBarrick Gold Corp (USA) (NYSE: ABX) to Outperform from Sector Perform as he expects shares to benefit from strong FCF generation in 2017 and 2018, enabling the company to pay down its debt and advance organic growth projects. Walker sees gold production of 5.7 Moz at AISC of $722/oz in 2017 (prev. 5.2 Moz at $754/oz), then the expected step down to 5.1 Moz at AISC of $733/oz in 2018 and 4.6M oz longer term. Meanwhile, Barrick Goldexpects to produce at least 4.5 Moz/year through 2021 and targets sub-$700/oz AISC by 2020, versus RBC's conservative estimate of about $750/oz. "With a production decline discounted into the share price, we believe Barrick can more effectively create shareholder value with production below 5Moz," Walker wrote in a note. Given near-term improvement in production, the analyst projects sufficient operating cash flow at $1,100/oz gold for Barrick to fund its planned capital spending program and reduce their debt by $2.9 billion, to the $5 billion target by YE2018. Further, a stronger balance sheet reduces need for non-core asset sales. In fact, the market anticipates Barrick focus on internal development projects that meet its return hurdles, rather than seek external M&A opportunities. At last check, shares of Barrick Gold were up 0.79 percent to $19.17. The analyst raised his price target to $23 from $19. Related: Forget About Gold And Silver; Rhodium Is One Hot Commodity 10 Stocks To Watch For March 16, 2017 View More Analyst Ratings for ABXView the Latest Analyst Ratings Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga Pro: pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved. Acquire Media
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