Barrick Gold Corporation
The recent rebound in the gold prices led to a whopping 83% boom in the Barrick Gold’s (NYSE: ABX) share price performance since year-to-date. In fact, this rise in gold prices enabled Barrick to witness a 6% growth in its market capitalization in the past twelve months. For the moment, gold prices continued with their rally, rising 16% so far for this year. In my view this momentum in the gold price is likely to sustain through 2017 due to strength in contracts at reasonable price on mercantile indices like COMEX & NYMEX as well as demand for gold in Jewellery.
A look at Gold market
Gold as an investment has been considered a safe haven historically that occupies a significant portion in driving gold demand. As a result…show more content… Barrick realized a margin of $329 per ounce (average realized price in 2015 - AISC). This is undeniably the best gross margin in the yellow metal industry at present. In fact, its core assets delivered even a better gross margin of $500 per ounce. This is exactly the reason why the company generated positive free cash flow of $387 million for the fourth-quarter and $471 million in 2015, after several years of negative free cash flow.
More importantly, this positive free cash flow has come at the times when gold prices dropped nearly 10% or $125 per ounce over the course of the year, as compared to the previous year. Looking ahead, the company is planning to further reduce its costs structure, as it aims to limit its all-in-sustaining costs to below $700 per ounce by 2019. This should additionally enhance its cash flow generation ability in the coming years.
Lowering interest expenses & debt
Reduction in interest expenses is always considered a good move as it strengthens the operating cash flows. Barrick Gold is doing the same through reducing its debt load. For example, the company during the year repaid approximately $3.0 billion of its net debt through a combination of asset sales and free cash flow and new joint ventures. This on the contrary helped the company to lower its interest expense by $135 million on an annual
