Barrick Falls Behind Rivals as No. 2 Miner Misses Boost From Bullion Boom

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(Bloomberg) — Most of the world’s major gold mining companies have seen their stocks rise this year as bullion prices rise to repeated record highs. Not Barrick Gold

Failure to meet production targets, high operating costs and political unrest at mines in Africa and Asia have made investors increasingly wary of the world’s second-largest gold producer. On Thursday, Barrick announced gold production, which exceeded analysts’ estimates for the eleventh consecutive quarter.

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Barrick is one of many mining companies that have struggled to capitalize on the bullion boom amid rising mining costs and weak production. But among the largest producers of precious metals – Newmont Corp., Agnico Eagle Mines Ltd. and AngloGold Ashanti Ltd. – Barrick has routinely underperformed, with its shares virtually unchanged since the beginning of January. Meanwhile, gold rose by 30% during this period.

“We are rebuilding the business,” CEO Mark Bristow explained.

Barrick has spent years working to improve its balance sheet after accumulating debt from acquisitions. Bristow, who joined as CEO in 2019 as part of the Canadian company’s acquisition of Randgold Resources Ltd., has paid down that debt while exercising restraint in deal making. He also continued to diversify into copper.

Bristow’s explanation doesn’t seem to appeal to investors. Some of Barrick’s major investors sold shares while increasing their stakes in competitors. Blackrock Inc., one of Barrick’s largest shareholders, reduced its stakes during buyouts in Agnico Eagle and Newmont, according to regulatory filings in November. Other major investors such as Van Eck Associates Corp, First Eagle Investment Management LLC and Capital Group Inc also cut back. their possessions in recent months.

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Barrick is not the only one under scrutiny from shareholders whose expectations have been raised by gold’s rise. Its biggest competitor, Newmont, last month suffered the largest one-day drop in its shares since 1997 after it announced disappointing quarterly profits.

Bristow said investors are undervaluing Barrick shares. “Our job as managers is to make sure the market gets us right,” he said in an interview.

Barrick’s strengths lie in its productive mine complex in the United States, in addition to its large operations in Papua New Guinea and Mali. It diversified its business by expanding into copper just as the global energy transition increased demand for metal wire. The company has relatively little debt.

However, Barrick faced setbacks in its attempts to match production to the target cost. Its Nevada operations, jointly owned with Newmont, need major infrastructure repairs, and labor costs have increased.

“We are still not as efficient in Nevada as we are in some of our African mines,” Bristow said. “But we’re getting there.”

Africa is also a major concern among investors, particularly in Mali, where the military government is threatening to withdraw the company’s right to operate a mine. In the Dominican Republic, the expansion of Barrick’s Pueblo Viejo mine took longer than expected to complete.

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Operating problems at the Nevada and Pueblo Viejo mines “will persist through 2025 and are expected to have an impact on production,” Bank of Nova Scotia analyst Tanya Jakskonik wrote in a note Friday.

Setbacks have led to ceding territory to competitors. Newmont strengthened its position as the world’s largest producer with the acquisition of Newcrest Mining Ltd. last year, significantly boosting its gold and copper production. Agnico Eagle, once a small gold producer, surpassed Barrick’s market cap for the first time early this year. Meanwhile, Barrick’s annual gold production reached its lowest level since 2000.

Barrick has regularly missed Wall Street expectations on important measures such as revenue and gold production in its quarterly results – including financial disclosures last week.

“Barrick has a lot of challenges to overcome,” said Rick Rule, an American investment advisor and shareholder. “At the very least, it would be helpful if quarterly performance was in line with guidance.”

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