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Barrick (ABX) to Make Additional Investment in Reunion Gold

Barrick Gold Corporation ABX recently announced that it has agreed to exercise participation right regarding a private placement offering by Reunion Gold Corporation. The company agreed to acquire up to an additional 12,600,000 common shares of Reunion at a price of 18 cents per share for a total consideration of roughly $2.27 million.

Post the additional investment, Barrick will own a total of 60,600,000 Reunion Gold shares. However, Barrick’s interest in Reunion Gold will stay unchanged at roughly 15% of the latter’s issued and outstanding common shares.

Notably, Reunion Gold is an exploration and development company that focuses on acquiring, developing and exploring gold projects in the Guiana Shield of South America. Barrick holds Reunion Gold’s common shares for the purpose of investment. Subject to investor rights agreement between the parties on Dec 1, 2017, Barrick may acquire or dispose of some or all of the common shares or other securities of Reunion Gold that it owns depending on market conditions and other factors.

Barrick Gold’s shares have rallied 28.7% in the past three months compared with the industry’s 9% rise.

 



For 2018, the company projects gold production at the bottom end of the guidance range of 4.5-5 million ounces at all-in sustaining costs of $765-$815 per ounce and cost of sales of $810-$850 per ounce. Barrick expects gold production in the fourth quarter to be around 1.25 million ounces.

Barrick is likely to gain from the progress of key projects and efforts to digitalize mines. The company is also committed to de-leverage balance sheet by reducing debts. However, it faces headwinds from lower expected production and higher year over year costs in 2018.  

Barrick Gold Corporation Price and Consensus

 

Barrick Gold Corporation Price and Consensus | Barrick Gold Corporation Quote

 

Zacks Rank & Stocks to Consider

Barrick currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are CF Industries Holdings, Inc. CF, sporting a Zacks Rank #1 (Strong Buy) along with The Mosaic Company MOS and Cameco Corporation CCJ, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an expected earnings growth rate of 748% for the current year. The company’s shares have inched up 1.1% in the past year.

Mosaic has an expected earnings growth rate of 75.2% for the current year. The company’s shares have rallied 22.7% in the past year.

Cameco has an expected earnings growth rate of 66.7% for the current year. Its shares have gained 10% in a year’s time.

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