What should investors expect from Barrick?
Keep your eye on North American gold producers' 4Q14 results (Part 6 of 11)
Surprise on the cost side?
Cost deflation is the emerging theme for miners. Lower energy prices and depreciating lower currencies are expected to provide some relief to gold miners. Barrick Gold (ABX) has lowered its cost guidance for two quarters in a row. What should investors expect from Barrick? Another strong quarter on the cost side could be in the offing.
What investors should watch for
There are several things investors should keep a close eye on in Barrick Gold’s (ABX) 4Q14 results.
Production and cost guidance for 2015 will be the key attraction.
Watch for any update on Barrick’s planned divestment of assets, including African Barrick Gold and Kabanga nickel reserves.
Look for an update on Pascua-Lama, including any progress on permitting and any decision to restart construction.
In the next part of this series, we’ll provide a detailed analysis of the Lumwana copper mine in Zambia and why Barrick could take an impairment charge on it. Barrick could provide an update on this in its full-year results.
2014 guidance
During its 3Q14 results, Barrick raised its production guidance for copper by 20 to 30 pounds, to 440 to 460 pounds. This was due to the earlier-than-expected restart of the Lumwana mine. Barrick maintained the production guidance of 6.0 to 6.5 million ounces of gold. However, it lowered its AISC (all-in sustaining costs) guidance for gold to $880 to $920 per ounce, down from $900 to $940 per ounce.
Newmont Mining’s (NEM) recent results also beat expectations on account of lower costs. Results for Goldcorp (GG) were below consensus due to a miss on production expectations.
The SPDR Gold Trust (GLD) is a physical gold-backed ETF. The Market Vectors Gold Miners ETF (GDX) invests in the above stocks and is a good way for investors to access gold. GG, ABX, and NEM form 25.7% of GDX’s holdings.
Browse this series on Market Realist:
