Why Should You Buy Barrick Gold Corp?

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Gold prices have risen in the past 12 months and rose approximately 17 to 19% over the period, to close at $ 1,563.70 an ounce on the London gold market and $ 1,567.40 an ounce on Comex on Wednesday, February 12. Close gold futures market.

Gold is likely to continue to benefit from macroeconomic and geopolitical uncertainties in major economies as it is used as a safe haven for parking wealth while waiting for more stable times.

The prospects for gold are therefore positive for 2020 too. The price per ounce is expected to rise over 5% from its current level of $ 1,650 this year, creating an opportunity investors shouldn’t miss.

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Eleven out of a total of twenty-one sell-side analysts on Wall Street recommend buying shares in the North American gold producer Barrick Gold Corporation (NYSE: GOLD). Due to the tailwind of rising gold prices, the stock rose 43% to 12 February last year, outperforming the exchange-traded VanEck Vectors Gold Miners (GDX) fund by 15%.

Barrick Gold has six premium gold mines in its portfolio and produces the precious metal through reserves and resources that no other operator in the mining industry can replicate.

Barrick’s attributable gold mineral reserves are now 71 million ounces, equivalent to 1.68 grams of metal per ton of mineral. The total as of December 31, 2019 after one year of mining exhaustion represents a significant improvement in terms of accumulation (up 14.5% from 2018) and grade level.

The Company also has the ability to extract an additional 99 million ounces of gold with an average grade of 1.55 grams of metal per ton of mineral from the total assignable measured and indicated mineral resources, and an additional 39 million ounces from the derived category of mineral resources.

The potential for future growth is enormous. Assume that in an environment with higher prices, where gold is constantly trading above $ 1,500 an ounce, the company will have nearly four decades of production in front of it.

The asset base is geographically well diversified with operations in North America, the Caribbean, Peru, Argentina, Chile, West and Central Africa, Saudi Arabia and Papua New Guinea.

In 2019, Barrick’s gold production reached 5.46 million ounces (one of the industry’s lowest total costs of $ 894 an ounce). This is an impressive 20.7% increase from 4.53 million ounces in 2018.

The growth reflects a busy year, including the merger with Randgold Resources, the establishment of the Nevada Gold Mines joint venture with US gold producer Newmont Corporation (NYSE: NEM) and the sale of its 50% stake in Kalgoorlie Consolidated Gold Mines in belong to Western Australia.

Proceeds from the sale of non-core activities, higher prices and production, and lower copper costs allowed Barrick to increase annual free cash flow to $ 1.13 billion and strengthen its balance sheet, increasing net debt by 47% to 2 $ 2 billion fell. The balance sheet is now more solid than ever.

For the full year 2020, Barrick Gold expects consolidated production of 4.8 million to 5.2 million ounces of gold at a total cost of $ 920 to 970 per ounce and 440 to 500 million pounds of copper with total production continuing costs of $ 2. $ 20 to $ 2.50 per pound.

The stock price ($ 18.41 at Wednesday’s close) is slightly above the simple moving average of 200, 100 and 50 days and 16% above the 52-week average of $ 11.65 to $ 20.07.

The stock has a market capitalization of $ 32.62 billion, a price-to-book ratio of approximately 1.1 compared to the industry median of 1.5 and an adjusted EBITDA ratio of approximately 9.1 compared to the industry-wide EV-EBITDA. Median of 8.85.

The 14-day relative strength indicator of 54 indicates that the stock is neither overbought nor oversold.

As of February 12, the share also granted a dividend yield of 1.52%.

Disclosure: I have no positions in any of the above securities.

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