Gold News

Gold Mining Output -20% in Q1 at No.1 Barrick But Rising Costs Lag Price

GOLD MINING shares rose as the broader stock market rallied Tuesday while the rise in US bond yields paused with 10-year rates just shy of 3%.
 
Gold bullion prices bounced $5 per ounce from yesterday's 2-week low, touching $1328 as London opened for business.
 
That left gold little changed around last Friday's finish in non-US currency terms as the Dollar joined bond yields and paused its rise of the last week on the FX market.
 
Silver and platinum kept all of Monday's 2.7% and 1.0% drops respectively, trading back at $16.65 and $918 per ounce.
 
Palladium also failed to bounce after sinking over 6% yesterday amid reports that Washington may ease US sanctions over the metal against its No.1 miner, Russia.
 
The FTSE Gold Mines index meantime edged higher after the world's largest stockmarket-listed gold miner reported a 5% rise in first-quarter earnings despite a 20% drop in gold ounces mined.
 
Announcing suspension of a "prefeasibility study" on the Andes mountain project at Pascua-Lama – expected to produce 125 tonnes over its first 5 years but shut since 2013 by environmental orders from the government of Chile – Barrick said its all-in sustaining costs rose 4.1% in January-March from the same period of 2017 to reach $804 per ounce.
 
Bullion market prices rose 9.0% year-on-year in Q1 to average $1329.
 
Barrick's full-year guidance remains for maximum output of 155 tonnes in 2018, a further 6% drop after 2017's fall of 4%.
 
Barrick's output has now shrunk " nearly 40% since its peak of 2006," according to Reuters, having sold a raft of assets to raise money in 2014-17.
 
Total debt has meantime halved to $6.4 billion from the peak of 2012-2013, and "Barrick does not intend to sell further assets for the purposes of debt repayment," the company said Monday.
 
"Proceeds from any future portfolio optimization will be used to enhance our project pipeline, or returned to shareholders."
 
At the top of gold's bull run in 2012, ABX paid a dividend of 75 cents per share, offering a yield of some 1.6% to that year's opening price.
 
Last year it paid 12 cents per share, a yield on 2017's opening price of 0.5%.
 
Chart of Barrick Gold Corporation (NYSE:ABX) vs Dollar price of gold, 1985-2018. Source: BullionVault
 
Barrick's stock fell 1.8% on Monday, dropping to 1-week lows.
 
First quarter results are due from No.4 gold miner Goldcorp (NYSE:GG) on Wednesday, No.2 Newmont (NYSE:NEM) on Thursday, and No.3 Anglogold Ashanti (JSE:ANG) in early May.
 
Data from the world's largest gold producer nation China last week said its mining output fell 3% in Q1 after falling 6% across 2017 as a whole.

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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