Barrick Gold Corporation

GOLD Details

Barrick Gold Corporation (NYSE: GOLD) is a Canadian gold mining company focused on producing and selling gold and copper and other related activities, including exploration and mine development. GOLD has mining operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, the United States, and Zambia.

Deriving Value Gain From Consolidation: On September 07, 2021, Nevada Gold Mines (NGM), a joint venture between GOLD (61.5%) and Newmont Corporation (38.5%), signed an exchange agreement with i-80 Gold Corp. to acquire an additional 40% stake in the South Arturo joint venture and Rodeo Creek exploration property, in exchange for its Lone Tree and Buffalo Mountain properties. Under the agreement, NGM will also receive a consideration of up to USD 50 million contingent on mineral resources from the Lone Tree property. In connection with the agreement, NGM will also subscribe for a 9.9% stake in i-80 Gold (or up to USD 50 million worth of subscription proceeds, whichever is less) and become one of i-80 Gold's most prominent investors.

Distribution of Return on Capital and Quarterly Dividend: On September 02, 2021, GOLD announced the distribution of the second USD 250 million tranche of a return on capital distribution, which represents a return of ~USD 0.1405 per share (based on outstanding shares as of August 31, 2021). The proposed distribution will be made on September 15, 2021, along with the Q2FY21 dividend of USD 0.09 per share, payable to shareholders of record on August 31, 2021.

Q2FY21 Results: The company reported a YoY decline of 5.30% in total revenues to USD 2.89 billion in Q2FY21 (ended June 30, 2021) compared to USD 3.06 billion in Q2FY20, attributable to a decline in sales volume. Net income for Q2FY21 increased to USD 694 million from USD 622 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 5.14 billion and total debt of USD 5.15 billion.

Key Risks: Prices of gold and copper on the global market, which are highly volatile and uncontrollable, significantly impact GOLD's business. Hence, any unfavorable movement in their prices could negatively impact its financials. In addition, GOLD operates as a gold mining company, which is subject to several federal and state regulations. Therefore, the issuance of stricter regulations or non-compliance with required laws could adversely affect the company's profitability.

Outlook:

10-Year Production Outlook (Source: Results Presentation, August 09, 2021)

Valuation Methodology: Price/Cash Flow Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

GOLD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: GOLD's stock price decreased 15.58% in the past three months and is currently close to the lower end of its 52-week range of USD 18.41 to USD 30.48. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 41.91. We have valued the stock using the Price/Cash Flow multiple-based relative valuation methodology and arrived at a target price of USD 23.40. Considering the correction in the stock price, decent balance sheet, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 19.48, down 1.09% as of September 10, 2021, 2:05 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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