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Barrick (ABX) Shares Up 23% in 3 Months: What's Driving It?

Zacks Equity Research

Shares of Barrick Gold Corporation ABX have rallied 23.2% in the past three months compared with the industry’s 15.2% rise.


The company has a market cap of roughly $16 billion. Average volume of shares traded in the past three months was around 18,800.4K. 

Let’s take a look at the factors that are driving this gold mining company.

Driving Factors

Positive developments from merger with Randgold partly contributed to the rally in Barrick’s shares.

In September, Barrick inked a share-for-share merger deal with Randgold. Per the terms, shareholders of Randgold will receive 6.1280 New Barrick shares for each Randgold share. Post-completion of the merger, shareholders of Barrick will own roughly 66.6% and shareholders of Randgold will own roughly 33.4% of the New Barrick Group, on a fully-diluted basis.

The merger is likely to form an industry-leading gold company with highest concentration of Tier One Gold Assets (mines with 2017 production of at least 500,000 ounces of gold, total cash cost less than $748 per ounce and mine life of more than 10 years). Higher operating metrics that include lowest total cash cost position as well as highest adjusted EBITDA margin are likely to support sustainable investment in growth and shareholder returns.

Moreover, the New Barrick Group will have the ability to generate strong cash flow to support robust investment and return cash to shareholders. It will also have established partnerships with leading Chinese mining companies along with superior scale and the largest gold reserves among senior gold peers such as Goldcorp, Agnico Eagle Mines and Newmont.

Recently, the deal was sanctioned by the Royal Court of Jersey, which was the last major step toward the creation of a new breed of gold company. All conditions related to the scheme of arrangement for the share-for-share merger deal have now been waived or satisfied. The transaction is expected to close on Jan 1, 2019.

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 Verso Corp. VRS, The Mosaic Company MOS and Cameco Corp. CCJ.

Verso has an expected earnings growth rate of 570.7% for the current year and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied 32% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mosaic has an expected earnings growth rate of 75.2% for the current year and has a Zacks Rank #2 (Buy). The company’s shares have moved up 14.7% in the past year.

Cameco has an expected earnings growth rate of 66.7% for the current year and also carries a Zacks Rank #2. Its shares have gained 20.8% in a year’s time.

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