Canadian mining giant Barrick Gold (TSE: ABX)(NYSE: GOLD) completed it’s $5.4 billion merger with Africa-centered Randgold Resources earlier this year in a move that caught the attention of industry experts. Many large miners are looking to M&A activity to shake up their operations and inspire new growth in a previously lagging industry.
Underneath the curtain, however, it seems like many companies are more desperate for these mergers than first anticipated, with a number posting significant losses. It turns out Barrick Gold is one of them, which announced that it lost $1.2 billion – or $1.02 per share – in the quarter ending in December.
In comparison, Barrick lost $314 million – around 27 cents per share – over the same time period in 2017. The fact the company losses have essentially quadrupled over a 12-month period is worrying to many investors and analysts alike.
Much of this comes from a net impairment charge concerning the Lagunas Notre mine in Peru as well as higher government taxes for its Veladero mine in Argentina. Another contributing factor was a reduced gold output in it’s Acacia Mine, which is locked in a dispute with the Tanzanian government. Despite this, however, the company remains optimistic for the future, expecting that their new merger with Randgold will invigorate operations as well as share prices.
“The new Barrick has a unique ability to grow three-dimensionally: through its large and high-quality exploration portfolio and geological capability; the brownfields extension potential at its existing operations; and new projects destined to become Tier One mines,” said Mark Bristow, referring to mines that produce at least 500,000 ounces of gold a year. “In the short time that we’ve been together, the combined team has already made great progress in applying Randgold’s proven strategy to a new global group.”
The company also expects that it will offset some of its assets to improve the quality of its portfolio. As such, the merged miner will also be expecting to produce less gold in 2019 then either both Randgold and Barrick did together in 2018.
Goldcorp shares were trading down around 4.4 percent when the news come out, continuing what’s been a five-day downtrend. Over a five-year period, however, Goldcorp has fallen out of favor significantly, dropping from C$30.67 in 2014 down to its present price of C$14.34 as of today.
Barrick Gold Company Profile
Barrick Gold Corp is a gold mining company. The Company is principally engaged in the production and sale of gold and copper, as well as related activities, such as exploration and mine development. The Company’s segments, include Barrick Nevada, Golden Sunlight, Hemlo, Jabal Sayid, Kalgoorlie, Lagunas Norte, Lumwana, Porgera, Pueblo Viejo, Turquoise Ridge, Veladero and Zaldvar.
Pueblo Viejo, Lagunas Norte, Veladero and Turquoise Ridge are its individual gold mines. The Company, through its subsidiary Acacia, owns gold mines and exploration properties in Africa. Its Porgera and Kalgoorlie are gold mines. Zaldivar and Lumwana are copper mines. The Pascua-Lama project is located on the border between Chile and Argentina. The Company owns a number of producing gold mines, which are located in Canada, the United States, Peru, Argentina, Australia and the Dominican Republic. – Reuters
