Barrick Gold SELL

ABX : TSX : C$19.82
ABX : NYSE
SELL 
Target: C$17.50

COMPANY DESCRIPTION:
Barrick is the largest gold producer in the world and has
a portfolio of operating mines and development projects
located in the United States, Canada, Australia, Peru,
Chile, Argentina, and Tanzania. In 2012, the company’s
operating mines produced 7.42 million ounces of gold, at
total cash costs of $584 per ounce.
All amounts in C$ unless otherwise noted.

Metals and Mining — Precious Metals and Minerals
FORECAST 2014 PRODUCTION 11% DOWN,  RESERVE LOSSES AT 18%
Investment recommendation
Our target price has been revised from C$20.50 to C$17.50 to reflect the
recent shift lower in the gold forward curve and to reflect our estimate
of potential reserve and mine plan changes at YE13. This report
provides an analysis of potential YE13 reserve changes on an asset by
asset basis. Based on the implied negative return to target, we have
revised our rating on Barrick from Hold to SELL.
Investment highlights
 Barrick is developing new mine plans to reflect a lower gold price
environment and maximize cash flow. We estimate 2013 gold
production at 6.36mozs, 11% lower sequentially. Cash operating
costs are expected to be only modestly lower at ~$585/oz.
 We estimate that operating reserves (excluding development assets)
will have declined ~18% at year-end. While reserve grades could
potentially increase ~11%, we note that Barrick has been mining
~19% above reserve grade over the past four years.
 Our 2013 EPS and CFPS estimates have been revised to $2.30 (from
$2.32) and $3.23 (from $3.07), respectively.
Valuation
We have revised our target price from C$20.50 to C$17.50, which is
predicated on an above sector average 0.90x multiple to our forward
curve derived operating NAVPS estimate of C$22.34 (from C$25.65) plus
net debt and other assets. Our target multiple fully reflects Barrick’s
numerous positive attributes; we just do not see the value proposition
for Barrick at current metals prices. Barrick is currently trading at a
27% premium to its gold peers on NAV. Near term positive free cash
flow is expected to be largely utilized to finish constructing Pascua.

 

Barrick Leads Gold Producers With New Mine

Sacramento Gold Miners logo

Sacramento Gold Miners logo (Photo credit: Wikipedia)

Sept. 22

It is simple math – the new mine- Pueblo Veiejo will produce 1 Million ounces a year at a cash cost of  less than $500.

At the same time Barrick has an annual production in access of 7 million ounces -  to be reduced only slightly by the sale of the African Barrick properties. Barrick has in 2012 an average realized price of $ 1.608 per ounce.

In the gold portfolio blog www.ampgoldportfolio.com the twin goals are to some measure of investment saefty  in gold miners by finding the producers that offer :

1) increasing production

2) cost containment.

Barrick meets both these standards and ( of course) avoids the junior miner qundary of funding expansion without taking on debt or issiung more shares.

On the technical front, Barrick Gold appears to be on a great run, as it has outperformed its peers in the industry. With a price earnings multiple of 9 times, which is well below the industry’s nearly 15 times.

Barrick leads its peers in return on equity at 16.32% as compared to its competitors such as Newmont Mining at almost 5% and Goldcorp at 8.15%

For further incentive – and again simple math ) look att he results for Barrick if and when gold hits the targets of Bank of America ( $2000) or Jim Sinclair ( $3500).

Add investor psychology – we have not yet witnessed any media attention to gold as an inflation hedge or media stories of ” average ” investors turning to gold for any portion of their portfolios. In a recent video ( available on You Tube ) Marc Faber asked a Dubai audience if any members had more than 5% of their assets in gold. Few raised their hands . his conclusion was that the price had a long way to run and that the ” maia” stage of price appreciation would not happen until the audience reply was 50 %  of those present.

Barrick is fully covered in our new book – available on Amazon – The AMP Gold and Precious Metals Portfolio

2. $19.95
Product Details

Barrick Gold – Great Results – No Respect

Barrick Gold's Cortez gold mine

Barrick Gold’s Cortez gold mine (Photo credit: Sandra Cuffe)

Barrick Gold Corp. (ABX-T37.690.170.45%) reported a 3-per-cent rise in first-quarter profit and announced an increase in its dividend as higher gold prices helped it offset higher cash costs. <:aside>

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Barrick Gold Corp.  (ABX-T)  

37.69     0.17   0.45%
As of May 4, 2012 4:00
 
 
“What more can you ask for?
Record results for six years in a row. Great fundamentals, exceptional performance, meeting guidelines, social responsibility, high quality of people and employment, a great team of management, a leading position in your industry – for God’s sakes, the world should be at your feet,” Mr. Munk told CEO Aaron Regent and other officers at the company’s annual general meeting in Toronto.

The results met analysts’ expectations but even so, stock in Barrick closed 2.7 per cent lower in Toronto, about 30 per cent off 52-week highs set in September.

Market pundits say investors are abandoning the gold sector due to uncertain growth prospects and perceptions of increased risk around existing deposits that have yet to be developed. The case of Kinross Gold, which was forced to write down $2.94-billion on its flagship Tasiast mine project in Africa just a year after acquiring the asset, is seen by some as a warning of what can go wrong.

Other gold stocks under siege include No. 2 Canadian miner Goldcorp Inc., valued at $37.54 a share these days and off roughly the same amount as Barrick. Kinross Gold has seen its market capitalization chopped by more than half in the past eight months.

Barrick, which produces more than seven million ounces of gold a year, reported a profit of $1.03-billion (U.S.) or $1.03 a share for its first quarter, as gold prices jumped 22 per cent from a year earlier.

The miner raised its dividend 33 per cent and Mr. Regent, who also holds the title of president, promised that three new projects to come on stream this year and next will add significantly to cash flow.

Pueblo Viejo, the Dominican Republic project that starts production this year; and Pascua Lama, the gold project straddling the Andean mountains between Chile and Argentina and due to start production next year, will make Barrick a nine-million-ounce-a-year gold producer.

The Jabal Sayid project in Saudi Arabia will add up to 45 million pounds of copper production this year.

“We used to be able to show the kind of achievements that made Barrick, year in and year out, the best-performing stock … and there is now a divergence,” said Mr. Munk, who built the Toronto-based company after humble beginnings as an immigrant from Hungary.

There are many reasons for that, but not to face up to it and not to talk about it would be the greatest mistake a board and management and people responsible for the welfare of this company could do,” he said, otherwise describing the company as a text-book example of success worthy of Harvard Business School.

Mr. Munk also said he believes the fundamental driver of a mining company is the value of the metal it produces, even though gold prices are hovering near all-time highs as Barrick stock wallows.

Eventually, he said, Barrick’s stock price will reflect both the company’s strength and the value of gold.

“We made good progress on a number of areas in the quarter,” Mr. Regent said. “We had good operating performance, which translated into solid financial results and further advanced our projects under construction with Pueblo Viejo and Jabal Sayid to start producing this year and Pascua Lama in the middle of next year.”

Barrick Gold Sector and Forecast Follow Up

African Barrick Gold

Image via Wikipedia

Thesis: The AMP reputation was built in part on the call for gold at $ 780 to go much higher. The AMP continues to raise our targets based on the exclusive Richardson/ Bass Quant - now seeing $ 2000 as the next target.

We see gold as a hedge against government cupidity and stupidity and follow the major players .

Goldcorp (GGtrades around $46, has a year high of $56.31 and a year low of $41.91. The price earnings ratio is 23:31. The company’s earnings per share are $1.97. The dividend yield is 1.20%. Total cash is $1.48 billion and total debt is $7.26 million. The current ratio is 3.82 and book value per share is $25.76. The company is well positioned, with a low cost basis in its overall operations. Goldcorp’s core business is its mining operations in North America, Mexico, Central and South America. The company’s income from operations comes from its gold, silver, copper lead and zinc sales, but primarily this is a gold producer.

Third quarter 2011 results showed the company increased gold production to 592,100 ounces compared to 588,600 ounces in the same period 2010. 

Barrick Gold Corporation (ABXtrades around $48, has a year high of $55.95 and a year low of $42.50. The earnings per share are $4.17, and the price earnings ratio is 11:54. The dividend yield is 1.20%. The company has total cash of $2.96 billion and total debt of $13.38 billion. The book value per share is $22.38. Barrick mines for gold in the U.S., Canada and Argentina, which represents 39% of the company’s gold production. It also mines for copper in Argentina and Chile and the Dominican Republic. I think the company is well-positioned. It operates gold mines in Papua New Guinea and in Western Australia which represent 12% of the company’s proven and probable reserves.

For third quarter 2011 Barrick had record net earnings which increased 45% to $1.37 billion or $1.37 per share compared to $940 million or $0.96 in the third quarter of the prior full fiscal year. Record earnings were due to higher gold and copper prices along with higher sales volumes of copper. Barrick is in good shape to reach its full 2011 year operating guidance in my opinion, which has production expectations of 7.6 million to 7.8 million ounces at cash costs of $460 to $475 per ounce. Copper production is expected to be 450 to 460 million pounds at total cash costs of $1.60 to $1.70 per pound for the full 2011 year.

www.jackbassteam.com

http://www.youtube/watch?v=4hb4vG07Zt4&feature=youtu.be&t=55s

Twitter @jack25bc

Reply to  jbassbia@yahoo.com

Barrick Gold Downgraded As Target Price Achieved

Nevsun Resources

Image via Wikipedia

Cannacord has down graded several gols stocks on the basis that the recent rise has achieved full value. I think we will see higher gold prices and therefore have maintained a 10 % position for the AMP Portfolio . Recall – this is a defense against government cupity and stupity.

Below is Canacord’s reasoning:

Barrick Gold Corporation

Hold ↓, Target US$57.50 ↓
• Downgrading to HOLD (from Buy) based on limited implied return; decreasing target to US$57.50 (from US$61.50)
Investment recommendation
We are downgrading Barrick Gold to HOLD from Buy based on relative valuationand limited implied return to our target price. Barrick currently trades at 0.90x P/NAV (5%/Spot gold) vs. the senior/intermediate group average of 0.84x despite a relatively flat production profile over the next few years. Although our modeled
production profile currently excludes large low-grade projects such as Cerro
Casale, Donlin Creek, and Reko Diq (which we currently value on an in-situ basis), inflationary pressures on capital/operating costs and likely long timelines could potentially result in diminished investment returns on these projects.
Investment highlights
• Our 5%/peak NAVPS estimate has declined by a modest 2%, explained by the reduction in our peak silver price forecast to $35/oz from $40/oz.
• Our target multiple has been lowered to 0.95x from 1.0x, and reflects a
discount to the average senior/intermediate target multiple of 1.1x due to limited growth potential relative to its peers.
Valuation
Our 12-month target price has been lowered to US$57.50 from US$61.50 based
on 0.95x (previously 1.0x) our 5%/peak NAVPS estimate of US$60.51 (previously US$61.62).
Nevsun Resources Ltd.

, Target US$7.00 ↓
• Downgrading to HOLD (from Speculative Buy) based on limited implied
return; decreasing target to US$7.00 (from US$7.50)
Investment recommendation
We are downgrading Nevsun Resources to HOLD from Speculative Buy based on relative valuation and limited implied return to our target price. Although we continue to view the Bisha mine as a quality asset with robust economics, justifying a premium valuation to the group, we see limited room for multiple expansion from current levels.

http://www.jackbassteam.com

Twitter @jack25bc

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