Morning Note: Market news and an update from Barrick Mining.
Market News
Following on from the US-UK trade deal, which saw a basic 10% tariff remain in place, US-China trade talks will take place this weekend. The US is targeting a cut to its China tariffs to less than 60% if talks go well. Howard Lutnick said the Trump administration is focused on big countries in future trade deals, possibly from Asia, but he noted Japan, South Korea, and India would require time and effort.
US equities rose last night – S&P 500 (+0.6%); Nasdaq (+1.1%) – spurred on by tech stocks. In Asia this morning, the main indices were also firm, capping off another positive week: Nikkei 225 (+1.6%); Hang Seng (+0.2%). China’s exports grew a better-than-expected 8.1% in April in dollar terms despite a 21% drop in shipments to the US. China’s total trade surplus also beat estimates. The offshore yuan steadied.
The FTSE 100 is currently 0.4% higher at 8,570, while Sterling trades at $1.3250 and €1.1780. As expected, the Bank of England cut interest rates by 0.25% to 4.25%, highlighting that policy needs to stick to a ‘gradual and careful’ approach. Five members of the commit voted for a 0.25% cut, two for a half-point cut, and two for no change.
The German Dax has hit a new intra-day high. The 10-year Treasury yield remains close to 4.4% driven by diminished expectations of near-term rate cuts. Brent Crude continues to recover and currently trades at $63 a barrel, while gold is $3,330 an ounce.
Source: Bloomberg
Company News
Earlier in the week, Barrick Mining Corp. released Q1 results which were slightly better than market expectations as the company benefitted from higher prices and progress on strategic growth objectives. The company maintained its full-year production guidance and highlighted that costs per ounce are expected to trend lower. Despite the near 40% rise in the gold price over the last year, the shares are only up 10%, highlighting the potential for catch-up.
Barrick Mining Corp. (formerly Barrick Gold) is the world’s second largest gold producer. The company was created following the 2018 merger of Barrick Gold and Randgold Resources. In addition, in 2019, the group improved its portfolio through the formation of the Nevada Gold Mines joint venture with Newmont, providing exposure to the single largest gold-mining complex in the world.
As a result, the group operates mines and projects in 18 countries in North and South America, Africa, Papua New Guinea, and Saudi Arabia. It now owns six of the industry’s Top 10 Tier One gold assets with the largest reserve base among its senior gold peers. At the end of 2024, attributable gold reserves were 89m ounces. The group’s ten-year mine plans are based on reserves and geologically understood resource extensions, with a $1,400 per ounce long-term gold price currently used to allocate capital – note the current spot price is more than $3,300 per ounce.
Non-core assets will be sold – in Q1, $1bn of value was unlocked following the sale of the group’s stake in the Donlin Gold Project.
Overall, Barrick provides an attractive way to gain exposure to the gold price, albeit with the operational and political risks that come with a production company. The company is also well positioned to capitalise on global decarbonisation trends driving the long-term fundamental strength of copper with two world-class projects set to deliver into a rising price and demand market.
In the first quarter of 2025, revenue grew by 14% to $3.13bn, versus consensus of $3.06bn, while adjusted net EPS rose by 84% to 35c, ahead of the market consensus of 29c.
Gold production was 19% lower, at 758k ounces, although at the top-end of guidance (700k-750k), leaving the company on track to deliver on its full-year production guidance which has been reiterated.
The gold price has rallied this year on global geopolitical risks, macroeconomic uncertainty caused by tariffs, and central bank bullion buying. During the first half, Barrick realised a gold price of $2,898 per ounce, up 40% versus last year.
Barrick has the lowest total cash cost position among its senior gold peers, although in the latest quarter, all-in sustaining costs were up 20% to $1,775/ounce. That said, the company has highlighted that costs per ounce are expected to trend lower over rest of year driven by higher production.
Group copper production rose by 10% to 44k tonnes, with a realised price up 17% to $4.51/pound. All-in sustaining costs were down 15% to $3.06/pound.
The group generated free cash flow of $375m, up from $32m last year, and ended the quarter with net debt down 5% since the start of the year at only $623m. This leaves the group with the flexibility to manage its business and take advantage of new opportunities independent of the vagaries of the capital markets.
During the quarter, the company significantly advanced several key growth projects. Capital investment was up 15% to $837m, leaving the group on target for its full-year guidance of $3.1bn-$3.6bn.
In addition to a quarterly base dividend, a performance dividend is paid based on the amount of cash, net of debt, on the balance sheet at the end of each quarter. Today, the group has declared a payout of 10c in respect of Q1 performance. Barrick is also undertaking a share buyback program in order to capture embedded value in business and growth pipeline. During Q1, $143m shares were repurchased under the current $1bn program.
For the full year, the company is guiding to gold production of 3.15m-3.50m ounces; all-in sustaining costs of $1,460-$1,560 an ounce; copper production of 200ktm–230kt pounds; all-in sustaining costs of $2.80-$3.10 a pound. The group is assuming an average gold price of $2,400/oz – it is currently $3,380/oz – and discloses that a $100/oz move has a $450m impact on cash flow. The group is assuming an average copper price of $4.00/pound – it is currently $4.60/pound – and discloses that a 25c/pound move has a $120m impact on cash flow.
By the end of 2030, the group is still targetting more than 7.0m ounces of GEO, up 30% driven by the organic project pipeline and continued reserve replacement.
Source: Bloomberg
