Analysts at Stifel anticipate Barrick Gold will report improving operational performance in the second half of the year after the miner posted second quarter financial results that were broadly in line with expectations.
In a note to clients, the analysts noted that Barrick Gold’s 2Q earnings per share came in ahead of forecast at $0.19 but this was attributable to non-operating items.
They noted that in the year to date, the miner’s gold cash costs and all-in-sustaining cost (AISC) are tracking plus $94 per ounce and plus $112 per ounce, above the top end of the company’s 2023 guidance ranges.
“However, we anticipate that cash costs/AISC will decrease over the course of the year, driven by the denominator effect with higher production anticipated in 2H,” they wrote.
“That said, we see it difficult for ABX to meet gold cost guidance expectations, and our 2023 estimates have already been reflecting that.”
The analysts highlighted that Barrick Gold had reiterated its 2023 production guidance for both gold and copper after a softer start to the year.
“Year-to-date, gold production represents approximately 45% of 2023 gold guidance at midpoint, and copper production represents 44% of copper guidance at midpoint,” they wrote.
But planned mine sequencing is expected to drive a stronger second half, they pointed out.
“For the gold segment, stronger 2H production is anticipated to be driven by the ramp-up of the plant expansion at Pueblo Viejo, and higher grades at Cortez and Carlin as a result of mine sequencing,” they wrote.
“For copper, a stronger 2H is anticipated from Lumwana (throughput), however major maintenance at Zaldivar is scheduled for 3Q.”
They summarized: “We see Barrick aiming for the lower half of full-year guidance ranges.”
Stifel’s analysts maintained their ‘Neutral’ rating on the stock with a C$30 price target derived from a 1.45 times target price to net asset value ratio (P/NAV) multiple and CAD/USD exchange rate of 0.77.
Barrick Gold’s Toronto-listed shares traded at C$22.12 on Wednesday afternoon.
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