February 26th, 2009:
Barrick Gold Corporation (ABX)
Current Price: $31.34
www.barrick.com
In the world of mining, Barrick's name is golden. Barrick Gold Corporation (ABX) became the world's #1 gold producer (ahead of Newmont Mining and AngloGold Ashanti) after acquiring Placer Dome in 2006. Barrick churns out 8 million ounces of gold annually and close to half of the company's production comes from its North American operations, which include the Goldstrike property, located in Nevada's Carlin Trend gold-producing region. Its properties outside of North America include projects in Tanzania, Peru, and Australia.
ABX has a portfolio of 27 operating mines, many advanced exploration and development projects located across five continents, and large land positions on the most prolific and prospective mineral trends. ABX also has the largest reserves in the industry, with 138.5 million ounces of proven and probable gold reserves, 6.4 billion pounds of copper reserves and 1.03 billion ounces of contained silver within gold reserves as at December 31, 2008.
In 2008, ABX produced 7.66 million ounces of gold at a cash cost of $443 per ounce. In addition, the Company produced 370 million pounds of copper at a total cash cost of $1.19 per pound. For 2009, Barrick is targeting gold production of 7.2 - 7.6 million ounces and copper production of approximately 375 - 400 million pounds. Total cash costs are expected to be $450 - $475 per ounce of gold and $1.25 - $1.35 per pound of copper.
ABX has grown revenues from $2.35 billion in 2005, to $5.6 billion in 2006, to $6.3 billion in 2007 and $7.9 billion in 2008. ABX is profitable with a trailing P/E ratio of 18.
Analysts are projecting ABX to generate revenues in 2009 of $7.7 billion and $7.89 billion in 2010, but with Gold prices rapidly rising we believe these estimates are ridiculously low.
ABX has the gold mining industry’s strongest and only ‘A’ rated balance sheet, which positions the company well to fund its project pipeline and seize other attractive exploration and acquisition opportunities as they may arise.
Even with Gold setting up to hit a new all time high, ABX is still far off of its all time high set last year of $54.74. We believe ABX is headed back there soon and on to much higher levels.
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