Barrick Gold Corp. Earnings: 3 Surprising Numbers You Can’t Miss

These three important numbers from Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) can tell you where the company is headed.

| More on:

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) is on a roll this year, having gained a whopping 69% year to date as of this writing. While the market is pumping up the stock as the yellow metal shines brighter, the world’s largest gold miner revealed some startling figures in its latest earnings report that are not only fueling the rally, but could also give investors an idea about where the company is headed. Here are the numbers you must know.

US$831

For gold companies, all-in sustaining costs, or AISC, are a key measure that include all cash costs such as administrative and production expenses, along with capital costs such as maintenance and exploration of mines that are required to sustain and replenish production volumes. The lower the AISC, the higher a miner’s margins.

In 2015 Barrick’s AISC dropped to US$831 per ounce from US$864 an ounce in 2014. That came below the company’s own projections, making it one of the lowest-cost miners among peers like Goldcorp Inc. (TSX:G)(NYSE:GG) and Yamana Gold Inc. (TSX:YRI)(NYSE:AUY):

TABLE
Data source: company financials

While Yamana and Goldcorp are also striving to cut costs, Barrick’s aggression gives it a huge competitive advantage, especially during these volatile times. Better yet, the company expects to scale down its costs even further despite lower projected volumes, which should boost its margins even in adverse conditions. None of Barrick’s peers have exhibited such confidence and clarity of vision.

Source: Barrick's Q4 2015 Earnings Presentation
Source: Barrick’s Q4 2015 earnings presentation

Barrick aims to take its AISC below US$700 per ounce by 2019.

US$3.1 billion

Barrick management initiated a massive restructuring program last year that prioritized cost control and debt reduction. The company is delivering on both fronts.

Barrick reduced its long-term debt by a solid 24%, or nearly US$3.1 billion, in 2015 primarily through the sale of non-core assets. Barrick expects to repay another US$2 billion worth of debt this year as it aims to reduce total debt to less than US$5 billion in the medium term. For perspective, the company ended 2015 with roughly US$9.8 billion in long-term debt.

Deleveraging should make the company leaner and stronger, enabling it to benefit tremendously when the business cycles turn.

US$471 million

Despite a sharp slump in gold prices, Barrick generated positive free cash flow to the tune of US$471 million for the first time in four years in 2015, thanks primarily to lower capital spending backed by the sale of non-core assets. Today, Barrick is one of the few in the industry that is free cash flow positive.

ABX Free Cash Flow (TTM) Chart

ABX Free Cash Flow (TTM) data by YCharts

At the same time, the company boasts a solid cash and equivalents balance of US$2.7 billion, providing it a better margin of safety during difficult times.

While Barrick always drew the attention of investors because of its leadership in the global gold industry, its focus on cleaning up its balance sheet and improving cash flows now presents an even stronger investment thesis. Gold may not always shine, but long-term investors have a good option to consider here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Neha Chamaria has no position in any stocks mentioned.

More on Metals and Mining Stocks

construction workers talk on the job site
Metals and Mining Stocks

2 No-Brainer Mining Stocks to Buy With $200 Right Now

You can buy these top Canadian mining stocks with just a $200 investment right now to start your long-term wealth…

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Good Buy Right Now?

First Quantum is a TSX stock that trades 61% below all-time highs. However, the mining stock still trades at a…

Read more »

nugget gold
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Here are two of the best Canadian gold stocks that can yield some eye-popping returns in the long run.

Read more »

nugget gold
Stocks for Beginners

The Ultimate Mining Stock to Buy With $1,000 Right Now

This mining stock just saw a drop, but don't let that keep you from diving in. This miner is due…

Read more »

A plant grows from coins.
Metals and Mining Stocks

Canadian Mining Stocks: Buy, Sell, or Hold?

Explore 2025’s top Canadian mining stocks – gold, uranium, and base metals offer big potential in a dynamic, commodity-driven market.

Read more »

farmer holds box of leafy greens
Metals and Mining Stocks

3 Reasons to Buy Nutrien Stock Like There’s No Tomorrow

Nutrien stock has lost 34% of its value just this year alone and looks incredibly cheap today. Yet, secular trends…

Read more »

Canada national flag waving in wind on clear day
Tech Stocks

Trump Trade: Canadian Stocks to Watch

With Trump returning to the presidency, there are some sectors that could boom in Canada, and others to watch. But…

Read more »