Barrick eyes 30% production boost, CEO says undervaluation offers investment opportunity
Canada-headquartered mining major Barrick has laid out a promising production forecast, with plans to increase gold-equivalent ounces from its existing assets by 30% by the end of this decade.
Addressing the Gold Forum Americas audience in Colorado Springs, on Tuesday, CEO Mark Bristow highlighted the strength of Barrick’s asset base, which positions it for future organic growth while keeping an eye on industry consolidation opportunities.
“Chronic underinvestment in exploration, which I have often flagged at this forum, has led to a dearth of new projects, forcing companies into M&A,” Bristow said. “While Barrick is very alert to value-accretive opportunities which the growing pressure for consolidation may create – and we continue to look for any that will meet our stringent investment criteria – we have the luxury of doing so from an asset base that will support organic growth well into the future.”
Reflecting on the company’s transformation that began five years ago with the Barrick-Randgold merger, he said: “We set out to build a sustainably profitable gold and copper business focused on world-class assets. We did not have to buy them at a premium; they were embedded in the merged portfolio of Barrick and Randgold and we just had to unlock their value.”
Barrick now operates six tier one gold mines with more in the making, underpinned by quality orebodies with industry-leading grades that drive improving cost profiles. Alongside its gold portfolio, Barrick is also building a substantial copper business to meet rising demand for this strategic metal, enhancing growth optionality to include copper/gold porphyries.
Bristow outlined three major gold opportunities in Nevada, which he believes is “the world’s premier mining jurisdiction”.
The recently commissioned Goldrush mine is ramping up to a targeted 400 000 oz/y by 2028. Adjacent to Goldrush is the 100% Barrick-owned Fourmile, with grades double those of Goldrush, positioning it as another tier one mine in the making.
Meanwhile, the 14-million-ounce Leeville project is developing into a significant growth driver, potentially doubling or tripling Carlin’s reserves and extending its life beyond 2045.
On the copper side of the business, two transformative projects are on track for first production in 2028. The Reko Diq copper/gold project, in Pakistan, is designed to produce 400 000 t/y of copper and 500 000 oz/y of gold in the second phase of its development. The Lumwana Super Pit project, in Zambia, will double the mine’s production over a 30-plus-year life.
“Mining is a consumptive industry which requires constant replacement of the ounces it depletes. Barrick leads the industry in orebody expansion and has more than replaced the gold reserves it has mined over the past five years. Even more significantly, the ounces that have been added are at the same or better grade than the reserves that were mined,” Bristow said.
He noted that since 2019, Barrick had also built an industry-leading balance sheet, reducing net debt by $3.5-billion, investing $11.2-billion in ten-year life-of-mine plans for its key mines and returning more than $5-billion to shareholders. Its strong operating cash flows would provide the financial flexibility to fund its growth projects.
Bristow expressed astonishment at how undervalued Barrick’s shares remain, considering the company’s asset portfolio.
“Based on analysts’ consensus net asset value calculations, the value of just our interest in Nevada Gold Mines and our copper portfolio almost exceeds our current market capitalisation. This means that the rest of our business is only valued at $3.3-billion, and that includes our interest in three tier one gold mines outside Nevada, the world-class Fourmile project, and the development projects in the pipeline. It also does not take into account our exploration teams’ unparallelled success in discovering new ounces. At our current share price, the case for investing in Barrick should be compelling,” he said.
Source: https://www.miningweekly.com/