Barrick Gold Corporation (NYSE:ABX) bidding its shiny dozen goodbye
Barrick Gold Corporation (NYSE:ABX) is planning on selling, closing or curbing production at twelve of twenty-seven mines. The largest gold producer in the world is making humungous efforts to bolster profitability after having reported the biggest write-off in the industry. The company said that it wrote-down $8.7B worth of global assets, axed its dividend by 75% and downsized 30% of staff at its corporate office.
The gold churners
Jamie Sokalsky, ABX’s Chief Executive Officer is in efforts to restore the company’s profit-margins after gold prices crashed by 22% this year. This has been the yellow metal’s steepest quarterly-drop in London, in over 90 years. Sokalsky said that any of the company’s operations stretching from Papua New Guinea to Peru that have costs more than $1,000/ounce will either be put through mine-plan adjustments, be shutdown or sold.
The 12 mines that are currently under review account for around 25% of the company’s output. Sokalsky’s stand is that every mine has to be profitable even at lower gold prices. This is a definite positive for Barrick as it indicates the seriousness with which their top man is handling the current downtrend.
It seems like the determined CEO’s efforts are paying off. There was a y-o-y drop in production costs which beat the analyst’s average estimates. The company cut down its capital-expenditure budget by around $1B and it has also cut its projections for 2013. The company’s stock is still down 49% this year. As per analyst estimates, Barrick stock has 17 “holds”, 11 “buys” and 1 “sell”.
Gold has risen for 12 successive years but in April it dipped into a bear market. The analyst estimate is that, next year, the prices may average at around $1,358 /ounce and will drop to $1,335/ounce in 2015. The precious metal sure has all the gold miners running for cover.