In a report published Wednesday, RBC Capital Markets analyst Stephen Walker speculated that Barrick Gold Corporation (USA) ABX will report a weaker first quarter results quarter-over-quarter, primarily due to lower production at its mines.
Walker is projecting the company will earn $0.07 per share in its first quarter, short of the consensus estimate of $0.15 per share. The lowered estimate stems from lower throughput and grades at Goldstrike (as waste stripping continued at Deep Post), the early ramp-up of the Thiosulphate process, lower grades at Cortez Hills and routine maintenance at Pueblo Viejo.
The analyst added that his first quarter copper production of 113Mlbs at cash costs of $1.86 per pound is below the prior quarter's production of 134Mlbs.
Walker said that he expects production to improve from quarter to quarter and achieve a full-year 2015 production of 6.32Moz, versus the company's guidance of 6.2Moz to 6.6Moz.
Investor Focus Will Be On A $3 Billion Debt Reduction Plan
Walker stated that a joint venture with Newmont Mining Corp and Kalgoorlie Consolidated Gold Mines is a "non-core" given the fact that Barrick isn't the operator. The analyst did add that instead of selling its stake in KCGM outright, a swap for one of Newmont's metallurgical assets in Nevada could have a "favorable" impact on valuation and a positive re-rating on shares.
Walker also noted a recent announcement of potential sources of capital from the sale of Porgera and Cowal, but he believes that the sale of Barrick's 64 percent stake in Acacia Mining PLC would have a more favorable impact on valuation. Finally, Walker stated a sale in whole or in part of Zaldivar could unlock value, given the market attributes lower valuation for copper versus gold production.
Shares remain Sector Perform rated with an unchanged $15 price target.
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