Earnings Preview: Barrick Gold expected to continue the momentum in Q2

Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX) stock has surged 66% in the last 12 months. This year, the share price rose 34% touching a new 52-week high of $18 this week. The gold prices eclipsed $1,500/ounce mark touching six-year high levels along with geopolitical concerns are going to act as a tailwind for Barrick and its peers.

Amidst positive momentum, the gold miner is scheduled to report its second quarter results on Monday before the bell. For the second quarter, the street is anticipating revenue of $2.14 billion, an increase of 25% over prior year and adjusted earnings to improve 2 cents to $0.09 per share compared to last year.

Production Update

Last month, Barrick updated the preliminary production update for the second quarter. Gold sales were 1.37 million ounces while production during the period was 1.35 million ounces. The average market price for gold came in at $1,309 per ounce.

Gold production was helped by increased production in Veladero and Loulo-Gounkoto mines, but offset by production hiccups at Pueblo Viejo mine and lower production at Barrick Nevada. With the closure of the Nevada Gold Mines joint venture in July, the company is well placed to meet its 2019 production targets. Gold cost per ounce is projected to be a tad higher in the second quarter vs. Q1 period.

Copper sales were 96 million pounds while preliminary production for the Q2 came in at 97 million pounds. The average market price for copper was $2.77 per pound. Q2 copper production and sales was down sequentially due to lower production at Lumwana mine.

2019 Guidance

Last quarter, Barrick has guided annual gold production to be in the range of 5.1-5.6 million ounces and all-in sustaining costs to be $870-920 per ounce. Copper production is expected at 375-430 million pounds with all-in sustaining costs per ounce anticipated at $2.40-2.90.

Looking Back

First quarter revenue rose 17% to $2.09 billion and adjusted earnings were down 27% to $0.11 per share due to the merger expenses relating to Randgold. However, the company’s earnings topped estimates. Long-term debt was down 9% to $5.8 billion.

Bottom Line

Bloomberg yesterday reported that Barrick is considering sale of certain assets to bring down the debt burden. The gold miner is planning to sell its Tongon mine in the Ivory Coast, Massawa mine in Senegal and to divest the Lumwana copper mine in Zambia.

With improved macros and the ongoing transition going on smoothly, investors would be expecting the company to continue the momentum in the second quarter.

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